Nifty in narrow range; support seen at 5,460

The Nifty moved in a narrow range and closed around the day’s high level after testing the lower-end support of 5,460. The trading volume in the Nifty March futures declined to a 15-day low as the bulls preferred strong consolidation around the current levels. The trading data suggest that the bears have covered short positions in the index futures while the bulls have built up fresh long positions. The Nifty March futures closed at a premium to spot and saw a long build-up of 530,400 shares

The trade summary matrix (TSM), which indicates the buy-sell positions of traders, saw buy-side trades below 5,491. The initial balance range and value area accounted for 65-70 per cent volume in the range of 5,478-5,502 in the form of change of hands. Around 85 per cent traded volume changed hands below the previous day’s lower band of value area (5,502), which indicates that the participants are not yet ready to take positions in the Nifty above 5,500. However, strong buying support was seen below 5,480.

The Nifty March futures opened above the upper band of the value area and after moving down considerably to around 5,466, the index was able to close above the value area on short-covering. It is a strong bullish signal for the market. The spot Nifty opened above the value area but closed within the value area, indicating some long unwinding at the higher level. A long build-up was seen in the 5,400-5,500-strike call options and short-covering in the 5,600-strike call options. Support is seen at 5,400 as the same strike put options added 854,700 shares in open interest through sell-side trades.

Going ahead, the Nifty is expected to move in a narrow range, with support seen at 5,460 and resistance above 5,527. The spot Nifty is expected to face resistance at 5,505-5,517 and most crucial support at around 5,450. The Bank Nifty is expected to move in a narrow band with a volume-based resistance at 10,945 and TPO-based support at 10,745. State Bank of India may get support at 2,579 and face resistance at 2,615.

Among other stock futures, Reliance Industries (RIL) is expected to see narrow band movement, with resistance around 1,005 and support at 970.