Expect fresh weakness below 5,850

The Nifty closed in a Doji pattern, third time in the last four trading sessions, indicating indecisiveness among participants. The trading volume in the Nifty April futures also declined 36 per cent to 12.33 million shares, as the futures moved in a tight range of 5,881-5,932.

A Doji is formed when the opening price is same or very close to the closing price. There is no buy or sell signal to be gleaned from this formation by itself, rather the market is telling us that it is at balance. However, it occurs at the end of a trend and hence we could say it is a sign of weakness for that trend.

The market picture chart based on the last three trading sessions does show sell-off signal as the Nifty remained range bound in three days and the trading volume remained moderate. The market picture chart for Thursday suggests responsive selling, as the Nifty after opening within the value area attempted to trade above the value area, but sellers entered the market at the higher level and auction price back into the value area. The TPO counts above the point of control (PoC) – area of most traded price – were greater than the lower portion of PoC indicating net selling day.

The initial balance range (5,882-5,916), the first two trading periods of 30 minutes each, saw 80 per cent volume and TPOs mostly through change of hands, which indicate that the Nifty may face selling pressure in the IB range tomorrow. The market picture chart also points to price based resistance above 5,933. The volume based support for the Nifty futures is seen at 5,869 and a close below 5,857 could lead to fresh weakness. The spot Nifty could get support at 5,843 and an upside resistance is seen at 5,908. The Bank Nifty is expected to face resistance around 11,875 and to get strong support at 11,600. April futures of State Bank of India may face resistance at 2,845, while buying support is seen at around 2,777. Reliance Industries is expected to face resistance around 1,054, while support is seen at 1,038. The options traders expects the Nifty futures to face strong resistance above 5,900, as the same strike call options today added 789,450 shares in open interest mostly through sell-side trades. The support based on open interest build-up in put options is at 5,800.