Expect a volatile session today

The market is finding it difficult to move out of the initial balance (IB) range established by liquidity providers. The IB range is the first two time-priced opportunities (TPO) time periods of 30 minutes each. It creates significant potential for a trend to emerge as it indicates participation by position traders as well as those holding overnight positions.

The Nifty futures moved in a tight IB range of 6,115-6,130 with 65 per cent of the volume changing hands, mostly through sell-side trades. On an intraday basis, it looks as though the market is trying to move out of the range, but the breakout could not be sustained above 6,141. So, the October futures declined sharply in the final 60-minute session to close at 6,108 — the lower end of the IB range.

As a result, we may see some range-bound trading around the IB area in coming days. The market picture chart hints at a TPO-based upside at around 6,142 and volume-based resistance around 6,152. However, on an intra-day chart for the last 60-minute trade, the October futures is projected to move down on Wednesday to around 6,080.

The rollovers in the Nifty November series continued to be slower, which indicates both bulls and bears are adopting a wait-and-watch stance. Only two trading days are left for the expiry of the October series. The rollovers in the November futures are at 12.42 million shares compared to 18.11 million in the October series at the same time last month. The poor rollovers also signal strong intraday volatility.

There was profit-booking in the 6,000-call options and a fresh long build-up was created in the 6,100-strike call options to hedge short positions around the 6,100 levels. The open interest (OI) in the 6,100-strike call and put options has been more or less identical and, hence, October is likely to close at 6,090-6,135. The fresh short build-up in the 6,200 put options also confirms expiry near 6,100 levels.

Among stocks futures, a strong follow-up rally is expected in Reliance Industries (RIL), Tata Motors and Maruti Suzuki . State Bank of India (SBI) is expected to be weak. The RIL scrip, which closed above the upper band of the value area, is expected to see volume-driven rally around Rs 1,115 and TPO-based support at Rs 1,090.

Tata Motors is expected to go up to around Rs 1,215 and Maruti Suzuki is poised to move higher to Rs 1,590, based on an intra-day volume picture chart. SBI may see fresh correction around Rs 3,164, based on price projections on the basis of volume.