Upside resistance seen around 5,642

The Nifty held lower-end support, but closed in the red amid concerns that inflation would hurt economic growth and corporate earnings. The Nifty May futures closed a Doji pattern after getting support at a lower level and facing resistance at the lower level. A Doji forms when the opening price is the same or very close to the closing price. It does not indicate a definitive buy or sell signal, but the market is telling us that it is at balance.

The derivative participants continued price-based selling in the Nifty futures and in key banking sector stocks such as State Bank of India, ICICI Bank and HDFC Bank. Similar price-based recovery was seen in the afternoon trade to take the market in the green. However, the market fell back in the red due to profit booking from floor traders and other time-frame traders. The trade summary matrix data hint at a change of hands, indicating the entry of new time-frame traders.

The Nifty May futures moved in a tight range and saw 90 per cent volume in the initial balance (IB) range (5,515-5,565) established by floor traders. The TSM data suggest a change of hands in the IB range, indicating the entry of other time-frame traders. The May futures confirm this as they closed at par to spot, and added 140,500 shares in open interest, despite a trading volume of 22.11 million shares. The market is now looking for a breakout from the current trend and Wednesday’s non-trend day formation hints at some change in the trend.

The market picture chart, which provides an insight into where the fair value is and who is controlling the markets, hints at consolidation around the point of control (PoC) (5,525-5,540). The PoC represents the area of most-traded price. TPO counts below and above the PoC suggest some buying activities as TPO counts above PoC were lower compared to the lower portion of PoC.

If the market consolidates at the PoC level, there is a possibility of the Nifty revisiting the 5,600 level in the near future. However, the upside resistance is seen at around 5,642. The higher level selling pressure seen during afternoon trade can take the Nifty around 5,480, the MKTP chart suggests. Spot Nifty may face resistance above 5,632 and is expected to get strong support below 5,472.