Global cues remain important factor

The Nifty remained range-bound after gap-up opening as participants preferred to stay away because of weak European markets. The selling pressure that was above Friday’s low of 4,920 from other time-frame traders, indicated lack of interest at the higher levels. However, the Nifty has filled Monday’s technical gap, which is considered to be a major relief for bulls to maintain the 4,747 support level.

The S&P CNX Nifty closed at 4,888, up 2.88 per cent or 137 points as European Central Bank President Jean-Claude Trichet said yesterday that the ECB will resume covered-bond purchases and reintroduce year-long loans for banks. The Nifty October futures traded at premium to spot and settled at 4,899, up 130 points on account of short covering of 2.76 million shares during intra-day session.

The market profile suggested a normal day and short covering was seen in the morning session. The trade summary matrix data hinted at short covering from floor traders in the range of 4,906-4,936. However, the other time-frame traders turned sellers and took the Nifty to the day’s low of 4,872. However, the futures moved up from the day’s low on account of short covering to close around the lower band of the value area (4,892-4,926).

Market sentiment turned positive as October futures closed marginally to the gap created on Monday. However, the 50 per cent TPO count above Point of Control (PoC-4,910) hinted at a higher level of resistance. Global cues remained an important factor for the market momentum and, hence, it would be very difficult to predict the upper or lower price range on the basis of the MKTP chart.

Based on the intra-day trading pattern, the October futures expected to face resistance above 4,958 and is likely to get support at 4,852. Options traders covered short positions in 4,800-4,900-strike call and built up fresh short in the 4,800-4,900-strike put options. The 4,700-4,800-strike put options hold highest open interest among the put options and hence indicates a support level for the Nifty.

The top gainers to the index, Reliance Industries (RIL), ICICI Bank and Infosys Technologies witnessed short covering at the lower level. The October futures of RIL is expected to move up around 826 and to get support at 786, ICICI will move up to around 895 and Infosys around 2,612, the MKTP chart suggested.