Support for Nifty seen at 6,000

After testing the crucial support of 6,000, Nifty September futures settled at 6,050 on short-covering as participants saw no negative cues in the pipeline for a deep reversal.

The bulls were in full command as September futures closed at a premium of 20 points to the spot despite only two trading sessions left for the expiry of the current month’s series. Nifty October futures showed strong undercurrent with rollover of 4.71 million shares in open interest at 34 points premium to the spot.

The market players seemed to have accepted the Supreme Court verdict on Ayodhya and covered short positions on expectation of continuation of this bull phase in October. According to Moses Harding, head (global markets group), IndusInd Bank, the risk of a pullout by foreign institutional investors has been diluted with hope that those who missed the September rally will enter the markets. The expectation is that the party is likely to continue in November. So, the party is on for strategic investors to stay invested with stop below 5,850 for 6,225-6,375.

Bloomberg’s market picture, which provides insight into where the fair value is and who is controlling the market through time and volume at price in the form of distribution, is hinting at a price of 6,092-6,102 for the September futures and 6,112-6,122 for the October futures. Intraday volume data indicate the Nifty may not slip below 6,000. The price and volume data pertaining to Nifty futures indicate short-covering by bears in the value area (6,015-6,050).

The participants covered shorts in the 6,000-strike call and built long positions in the 6,100-strike call to hedge short positions in the Nifty futures. The change of hands in the 6,000-strike put and fresh open interest build-up in the 6,100-strike put hints at the Nifty breaching the 6,100 level before the expiry of this month’s series on Thursday. The open interest build-up in call and put options indicates the Nifty may expire around 6,100.