Selling pressure may ease today

As expected, the Nifty fell below the crucial support of 6,100 to close at 6,012 due to supply pressure from liquidity providers.

The Nifty October futures closed below the initial balance (IB) range for two consecutive days as these floor and day traders rejected the price range established in the first two TPO (time price opportunity) periods. The first-hour session serves as the foundation for the trading day as it creates significant potential for a trend to emerge for the rest of the day.

It is important to evaluate the IB range and the emerging value area to sustain the price movement created in the initial periods. If trading during the IB range returns to the previous day’s value area and today’s value is not built above/below the previous value area, then the opening may serve as a tail, which is a rejected price. The Bloomberg market picture for the past three sessions shows rejection of previous day’s price, as in the past three sessions, the Nifty has opened at the lower end of the value area and closed below the IB price range.

The 75-point correction was expected as the futures had closed below yesterday’s value area and the IB range. The futures on Wednesday settled at 6,038, significantly below the IB range (6,070-6,095), but within the value area (6,030-6,085). This may ease the selling pressure tomorrow and lead to a minor recovery. TPO data indicate recovery with a price target of 6,152. This recovery is achievable on strong global cues.

On the intraday market picture chart, the Nifty October futures is expected to get strong support around 5,990. The significant increase in open interest of 5.23 million shares in the November futures at 56 points premium to the spot suggests participants have started creating long positions. However, at the aggregate level, the open interest build-up at 17.66 million shares in November has been lower by five million shares compared to the same time last month. So, we can expect a high rollover tomorrow.