Strong resistance for Nifty at 5,790

The Nifty maintained its support and resistance levels, as indicated in this column in the Sunday edition. However, trading in the derivatives segment did not show any clear trend, as the market awaits the monetary policy. Hence, market participants are cautious. The Nifty is likely to stay within the 5,650-5,800 band till the expiry of this month’s series. A breakout is possible after the monetary policy and in the new derivatives series.

J Moses Harding, head, Global Markets Group, IndusInd Bank, says there will be clarity on the immediate direction after the monetary policy is announced on Tuesday. For now, continue to look for tight consolidation at current levels, with immediate bias for extended gains into 5,800.

At present, the major risk is foreign institutional investors shifting into the wait-and-watch mode to avoid time decay on investment and raising their exposure to the exchange rate risk when any upside momentum in the stock market is not visible.

The bulls had some rejoice on Monday, as the Nifty closed above 5,722, the most crucial resistance to take the index around 5,830. However, only two trading days are left for the derivatives expiry, hence, any significant upside from the current level is unlikely, even if the Reserve Bank of India comes out with a favourable monetary policy. The market picture chart suggests the Nifty futures may see volume-based upside around 5,787 and get time-price opportunities (TPO) support at 5,690.

The spot Nifty is expected to face strong volume and TPO-based resistance at 5,790. Nifty January futures settled at 5,740, a marginal discount to spot, and shed 3.07 million shares in open interest (OI), indicating short covering from bears. The February futures settled at a 20-point premium at 5,760 and added 3.62 million shares in OI, indicating long rollovers. The TPO and volume picture suggest an upside around 5,805 in the February futures. The build-up of OI in the Nifty calls and puts suggests the current series may expire around 5,720.