Support seen at 5,721

The April series expired on a nervous note ahead of the Reserve bank of India’s policy meeting on May 3, where RBI is expected to raise interest rates. On Tuesday, the derivate participants feared a rate rise and booked profit in banks and interest rate sensitive stocks. Reliance Industries closed below the support level, while ICICI Bank gained marginally on short covering.

The Nifty kept making lower lows from the early trade to eventually close the day at the lower-end of the trading range at 5,785, down 48 points. The markets have indulged in a time correction for the last few days, which has concurred with the expiry week. It almost seems like the market has been waiting for the April series expiry to go, before envisaging its next directional course.

The Nifty May futures closed at a 27-point premium to spot and saw rollover of 23.98 million shares in open interest, mostly through buy-side trades in the last 10 trading sessions. The market profile indicates selling range extension as the Nifty breaks down below the initial balance range over selling from other time-frame traders. The range extension normally gives a fairly strong breakout or breakdown type of signal.

The market picture chart hints at a TPO-based upside around 5,902 in the May futures. The volume-based support is expected to come at around 5,772, and later at 5,742. The spot Nifty may face resistance above 5,857 and is expected to get strong support below 5,721. The trade summary matrix data indicate buy-side bias, but strong selling pressure in the initial balance range (5,842-5,881).

The Nifty May futures closed below the value area (5,818-5,854) with 28 per cent volume changing hands below the lower band of the value area. The volume in the Nifty futures was significantly higher below 5,830 (53 per cent) and we may see strong resistance for the Nifty above this level.

The Bank Nifty is expected face strong resistance above 11,855 and lower-end support is seen around 11,605. The State Bank of India is expected to face resistance above Rs 2,949 and get volume-based support around Rs 2,845. Reliance Industries is expected to get support around Rs 964 and is likely to face strong selling pressure above Rs 1,019.