Market fully priced at current level

It was party time on Dalal Street on the last day of Samvat 2,066 with the BSE Sensex and the S&P Nifty hitting the new milestone as the US Fed delivered to expectations. Following a soft interest rate regime and maintaining excess liquidity in the system to get the US economy back on its feet, the Fed has also maintained the near-zero interest rates and has ruled out a reversal in this stance till June 2011. Technically, the Nifty has started its wave III of wave 5 up with a gap again, which is a positive sign, and has a minimum target of 6,350 going ahead.

The Nifty futures closed above 6,300, the first time in history, with the bears covering short positions while the bulls holding on a long build-up. However, at the current level, the market seems to be fully priced and we may see selling pressure coming in around 6,350. The poor trading volume in the last four trading sessions and almost unchanged open interest in the Nifty futures suggests a cautious approach by speculators. The liquidity suppliers, though, are inactive for the last couple of days due to the gap-up opening the volume in the value area, mostly of change of hands.

The trading volume in the Nifty futures today was largely in the form of change of hands and profit booking above 6,300. The trading volume, however, continued to be above the previous day’s price range in three consecutive sessions, indicating a strong undercurrent.

The strong market picture chart using volume is hinting at a fresh upmove in Nifty around 6,352, and an intra-day time-price opportunities (TPOs) based support at 6,280.

The short covering in the 6,200 call options and fresh build-up of open interest in the same strike put options suggest that the Nifty may not move below 6,200 in the near future. The participants expect the index to stay above 6,300 for some more time as 6,300-strike put added 1.41 million shares in open interest through sell-side trades.

Among stocks futures, Reliance Industries and State Bank of India closed above the value area with almost 40 per cent volume traded around closing level. The market picture chart indicates a volume base target of Rs 3,572 for State Bank and Rs 1,136 for Reliance Industries.