Nifty may fall to 4,700 on weak global markets

The Nifty October futures, after trading back and forth between 4,747 and 4,844, settled in a Doji pattern at close, indicating an equilibrium between buyers and sellers. State Bank of India (SBI) and ICICI Bank remained top losers on day-two, as participants showed lack of buying interest today and preferred to close long positions. SBI is expected to fall to 1,672 and ICICI Bank to around 761, on the basis of the market picture (MKTP) chart. Reliance Industries, which closed on a weak note, is likely to move down to around 740, and could face resistance at 795.

According to Moses Harding, head (global markets group), IndusInd Bank, given the weak global and domestic cues, there is no incentive to stay invested in equity assets, with the combined risk of losing time value and erosion in capital. We need to stay aside for a shift into the consolidation phase ahead of setting up a bullish trend. Till then, the Nifty will trend down into 4,450, ahead of 4,200. The open interest build-up in 4,300-4,500 strike put options in the new October series has already hinted at weak undercurrent and fall into 4,600-4,500, if the index fails to hold the support at 4,700.

As expected, the Nifty October futures failed to breach strong resistance above 4,827 and closed below 4,800 on the second day in a row. The market profile suggested a lack of interest among participants when the index moved above 4,816. The other timeframe traders and institutions turned sellers at the higher level and that pulled down October futures to a low of 4,747. The futures settled around the level of the previous day on short covering in the last 30 minutes of trade. Nevertheless, 60 per cent TPO count below Point of Control (PoC-4,804) is hinting at a higher level of resistance.

Global cues remained an important factor for the market momentum and, hence, it is very difficult to predict the upper or lower price range on the basis of the MKTP chart. However, 55-65 volume in the IB (initial balance) range and value area (4,780-4,822) through change of hands suggested consolidation in the October futures around those levels. However, weak global markets can take the Nifty around 4,700, the MKTP chart suggested. On a normal day, the Nifty could have moved up to around 4,836-4,861. Options traders covered short positions in 4,500-4,800-strike put and built up fresh short in the 4,800-4,900-strike call options.