Nifty expected to move up afresh

The Nifty recovered after getting support at 5,775 and closed at 5,862 on short-covering. Nifty December futures maintained its lower-end support of 5,775 and closed below the resistance level (5,905) due to significant recovery in the most-traded stock futures such as State Bank of India, Tata Motors and Bharti Airtel. We had indicated in this column yesterday that the market would maintain its upside bias with resistance for Nifty futures above 5,900.

The Nifty is expected to move up afresh with volume and time-price opportunities (TPOs)-based target of 5,990, the market picture chart sourced from Bloomberg suggests. The time-price opportunities (TPOs), the value area that makes up 70 per cent price points, is hinting at strong support at 5,780 in case the market reacts to the global pressure. The price movement and volume in Nifty futures after 11.30 pm suggest an index level of 6,000 in the near future.

The movement in spot Nifty after 11.30 pm suggests strong resistance at 5,952 and support around 5,687.

Nifty December futures closed at a 24-point premium to the spot and added 600,000 shares in open interest, mostly though buy trades after 11.30 pm, when the index started trading convincingly above 5,815. The initial balance range (5,785-5,815) saw a significant drop in volume from 56 per cent in yesterday’s trade to around 30 per cent today, which indicated that the early liquidity providers were not willing to sell their holdings at the lower level.

The initial balance range is the first two TPO time periods and is principally established by floor and day traders. In the past two weeks, the Nifty has seen either profit-booking or short build-up from liquidity providers with trading volume accounting for over 50 per cent of the day’s trade. So, subdued volumes in the initial balance range from liquidity providers means the market is expecting a fresh rally in the Nifty.

The trading in call and put options suggests strong resistance for the Nifty above 6,000. There was short-covering in the 5,800-5,900-strike call options and change of hands in 6,000 call options. Traders bought the 6,100-6,200-strike call options to hedge short positions in the 6,000-strike call options. The 5,700-5,800-strike put saw a significant addition in open interest through sell trades, which indicates a support level for the Nifty.