Nifty likely to remain weak on Thursday

The Nifty commenced the day on a positive note on Tuesday and traded around the resistance zone just before the announcement of the monetary policy. After the favourable policy statement, the Nifty broke the resistance of 5,800 for a brief period, but failed to sustain that level on account of volume-based selling by top traders. The index, however, managed to close at the lower end of the support. We had indicated in this column on Tuesday that the Nifty may face strong resistance above 5,790 and is likely to get support at 5,680.

However, going ahead, the volume-based selloff that started around noon from the high of 5,801 can take the Nifty around 5,602, the market picture chart suggests. The time-price opportunities-based support is expected to come around 5,660. The trading volume in the initial balance range (5,750-5,772), which accounted for 36 per cent of the total volumes, hints at high resistance at the level. The value area (5,708-5,774) saw a decline in volumes from around 70 per cent in the last three trading sessions to around 55 per cent on Tuesday. This means the market is likely to be weak on Thursday and the current series may expire around 5,660-5,690.

The February futures settled at a 16-point premium at 5,696 and added 6.2 million shares in open interest. The rollovers have been considerably poor, with only a day left for the expiry. The market is closed on Wednesday to celebrate the Republic day. The TPO and volume picture suggest the February futures may face strong resistance above 5,700 and the volume-based support is likely at 5,607. The trading pattern in put and call options indicates the Nifty may get support at 5,600 and face resistance above 5,700. However, some traders bought the 5,800-strike call options mostly to hedge short positions.

The credit policy initiated significant selloff in the two most traded private banks — HDFC and ICICI Bank. The market picture chart sourced from Bloomberg hints at fresh weakness going ahead. The price projection using volume picture indicates ICICI Bank can move down to around Rs 1,035, while HDFC Bank may fall to around Rs 2,014.