Index to stay in range till futures expiry

The Nifty closed above the crucial resistance level after consolidating around 5,660 on account of short covering by bears. The bulls booked profit above 5,722, based on all the trades done in the Nifty January futures above 5,722. The Nifty futures staged a smart volume-based recovery in the last two hours from around the day’s low of 5,632 to a high of 5,744. The future, however, settled at 5,718 on account of higher-level profit booking.

Going ahead, the Nifty is expected to move between support and resistance levels and a significant upside from the current level is likely to be capped at around 5,830. The open interest build-up in the Nifty February series, which is significantly lower at 3.28 million shares (5.97 million shares four days before expiry the same time last month) indicates the market will remain range-bound till expiry.

The market picture chart suggests that the Nifty futures may see a volume-based upside around 5,810 and get TPO-based support at 5,660. The spot Nifty is expected to face strong volume and TPO-based resistance at 5,785. The volume and the TPO accounted for around 40-46 per cent of the day’s trades in the range of 5,644-5,670, which is hinting at the support zone for the Nifty. The TPO and volume-based upside for the February futures is seen at 5,833-5,837 while support is expected at 5,680.

The traders covered short positions in the 5,700-strike call options and sold the same strike put options on expectation that the index may get strong support at that level. The 5,800-strike call saw a change of hands as the participants expect a pullback around 5,830 if the Nifty closes above 5,757.

However, a build-up of open interest in the Nifty calls and puts indicates selling pressure above 5,700 and support below 5,600.

Among stock futures, ICICI Bank and Infosys Technologies moved up strongly from the day’s low on account of short covering. ICICI Bank saw unwinding of 362,500 shares in the January series and a rollover of 401,250 shares in the February series. The volume drive from the day’s low of Rs 1,009 to Rs 1,052 is expected to take the stock around Rs 1,095, the volume picture chart suggests.