Support seen at 5,400 level

Nuclear leak risk has spiked the domestic market as investors withdrew from risker assets after Japan said the danger of further leaks remains. The market, however, covered two-third of the morning session losses with the Nifty March futures gaining sharply from the day’s low of 5,375 to a high of 5,505 as derivative participants covered short positions.

Despite sell-off in the morning and significantly higher volume, the undercurrent remains positive as the Nifty futures closed above the most crucial support (5,460) level. The rally in the Nifty futures from the day’s low should take the Nifty futures around 5,542, the market picture chart suggests. The spot Nifty is likely to see volume-based upside around 5,542. The support remains at 5,400.

The most positive development of the day’s trading was a significant short-covering in the Nifty March futures and fresh long build-up. The lower end buying continued unabated as the market picture chart shows more time price opportunities (TPOs) below the Point of Control (PoC). The Initial balance (IB) range (5,375-5,425), the first two TPO time periods, saw panic selling as trading volume accounted for 51 per cent of the day’s volume in the first two trading session. However, the market absorbed the sell-off and rallied above the IB range indicating buying range extension.

The trade summary matrix (TSM) data indicates change of hands, but with sell-side bias in the IB range. The value area (5,418-5,482) saw a drop in volume and TPOs, which indicate that the participants preferred to be neutral at those price range. The market picture chart source from Bloomberg show 80 per cent volume below the previous day value area (5,470) but 60 per cent TPOs below PoC (5,462-5,467) which is responsive buying.

The Bank Nifty is expected to move with a volume-based upside at 10,865 and support at 10,700. State Bank of India may rally around 2,613 and ICICI Bank around 1,010. Among other stock futures, as expected, Reliance Industries achieved our target (Rs 1,044) and closed in the green on short-covering and fresh long build-up. The stock is expected to move around 1,073-1,081, the TPO and volume picture chart suggests.

The options data point out unwinding on short position in 5,400-5,500-strike put options as wary speculators prefer to play safe on account of weak global cues. The buy-side trade at 5,400-strike call options suggests strong support level.