Upside around 5,600, support below 5,500

The Nifty June futures closed in a Doji pattern after moving briefly below 5,500 as floor traders booked profit at the higher level. A Doji forms when the opening price is the same or very close to the closing price. The Doji was formed with a lower shadow suggesting the active sellers initially, and once they had dried up, or as a reaction to some other force, the buyers regained all the losses. The Doji has to be read in relation to the recent activity to analyse market trend. The Doji has occurred after strong up-day and hence indicates a balance between buyers and sellers. It signals the start of a new phase of the uptrend, if a trend exists.

The Nifty June futures faced strong resistance above the previous day’s high and tested lower-end support at 5,500 to close in the green due to significant buying from other-time frame traders. The Nifty moved within the previous day’s value, but closed above the previous day’s high which indicates a strong undercurrent. The market on Wednesday, the penultimate day of expiry of the June series, is expected to be range-bound with lower-end support at 5,507. The strong buying at the lower level and the presence of other time-frame traders in the initial balance (IB) range (5,492-5,535) indicates the Nifty has very little room to move down below 5,500.

The trade summary matrix, or data, for Tuesday hints at sell-side trades in the IB range and a bout of short-covering at the lower levels and profit-booking at the higher level. The significantly high volume, 80 per cent, in the IB range indicates clear dominance of bulls. The market picture chart (MKTP) hints at a volume-based upside around 5,600 and strong support below 5,500. According to Moses Harding- Head Global Markets Group, IndusInd Bank, the immediate resistance ahead is 5,560. Till more clarity emerges on the immediate way ahead, observe the consolidation within 5410-5560 that couldextend to 5680, ahead of July monetary policy, before setting up a reversal from there into 5410.

The options traders expect the Nifty to stay and settle above 5,500 in the June series, and, hence, they covered significant short positions in the 5,500 and build-up fresh short in the 5,500-strike put options.