A rally expected around 5,220

The Nifty September futures closed on a weak note after facing a strong selling pressure at the day's high of 5,155 from the other time-frame traders. The close below 5,100 from the day's high indicates the bullish trend has not yet been restored, but the rally from the low of 4,901 has, at best, diluted and neutralised the bearish momentum.

According to Moses Harding, head, global markets group, IndusInd Bank, positive developments in the western markets would provide energy for extension into 5,200. The bull trend is some months away, so, keep up with the consolidation mode within 4900-5200.

As expected, the futures moved in line with our price-based projections, facing resistance above 5,150 and getting support below 5,070. The market profile suggested a mixed trend, with short-covering below 5,070 and profit-booking above 5,120. However, the close below 5,100 has signalled a fresh weakness into 5,019, if the market fails to hold to the strong support at 5,050. The change of guard in the initial balance range and the value area above 5,100 suggests the entry of a new set of players. The floor traders went for short-covering in the morning session and profit-booking at the higher levels.

The undercurrent has changed from bullish to neutral and, hence, we may see a strong consolidation around the 5,050 levels. The domestic market is hugely affected by global cues and, hence, a strong global market may lead to a positive opening on Monday. The volume-based pullback is expected to see a fresh rally around 5,220. Price-based support is expected to come around 5,020, suggested the market picture chart (MKTP). The futures closed at a marginal to the spot and shed 2.82 million shares in the open interest during the post-trading settlement period, indicating profit-booking by the old players.

The State Bank of India achieved our target of 1,957 on account of short-covering. The futures of SBI may go up around 1,988, the MKTP chart suggested. The options traders, however, smelled weakness when the Nifty slipped below 5,100. Profit-booking was seen in the 5,000-strike call options and the change of guard in the 5,100-strike call. The participants covered the short positions in the 5,000-5,100- strike put options, as they expected resistance above 5,100.