Volume-based rally likely to continue today

As was expected, the Nifty closed above 5,800 on account of short-covering by floor traders and fresh long build-up by other time-frame traders.

The trading formation in most part of the trading sessions was hinting at a non-trend day, as it has narrow initial balance (IB) range and value area. However, the Nifty April futures bounced back sharply after getting support at 5,767, to close at the day’s high of 5,874, on account of significant buying from other time-frame traders.

The volume-based rally from the day’s low is expected to continue tomorrow and is likely to take the Nifty around 5,980. The lower-end support is expected to come at around 5,757. The key drivers are expected to be index heavyweights such as State Bank of India, ICICI Bank, TCS and Reliance Industries. These stocks futures closed around the day’s high and also above the value area, suggesting strong volume-based buying from other participants.

The market picture chart, based on the trading pattern in the above mentioned stocks futures, indicates price level of Rs 2,885 for the April futures of the SBI and support at Rs 2,727. ICICI Bank is expected to move up around Rs 1,136 and to get support at Rs 1,096. Reliance Industries may move up around Rs 1,045 and get support at Rs 1,002. TCS is poised to move up around Rs 1,225 with lower-end support at Rs 1,179.

The market continued to throw a bullish or a strong recovery signal, because of lesser selling pressure above the point of control (PoC) in the last few trading session. The TPOs count also signals an active buy-side, as there are more TPOs in the lower portion of the PoC than in the upper portion. The rally in the Nifty futures is expected to strengthen, with the volume-based target seen at 5,980.

The spot Nifty may see volume-based upside around 5,945 and support at 5,735. The Nifty April futures closed at a 18-point premium to spot and saw unwind of 2.65 million shares in the open interest, indicating short covering from bears at the higher level. With the SBI and ICICI Bank expected to smart upside, the Bank Nifty is expected to move up around 12,025. The support for the Bank Nifty is seen around 11,615.