Volume-based support expected around 5,515

Going into the next week, the markets will watch for protests expected in Saudi Arabia. With Saudi Arabia being the lead member of Opec, there are concerns about oil supply if anything happens to disrupt production. The Dow Jones industrial closed in the red though it recovered by a half from the intra-day fall. The SGX Nifty closed 42 points lower over Friday’s official close on the OTC counter at the Singapore Stock Exchange. So, the market is expected to open gap down on Monday, if the Saudi tension escalates.

The Nifty closed in a Doji pattern on Friday after facing strong resistance around 5,612. The wary speculator, though, covered short positions in the Nifty March futures above 5,580, but lack of support at the higher levels and gradual profit booking pulled down the index to the day’s low of 5,517. A Doji pattern indicates uncertainty, but if one observes the open interest build-up in put and call options, the index may not go up or move down substantially from the current level. Going ahead, the derivatives data hint at consolidation around the current level before taking either side turn. The market continues to be volatile and is likely to send confusing signals for some more time.

The trade summary matrix (TSM) indicates change of hands as the participants prefer to cash in on intra-day volatility through a series of buy-sell action. The big traders were sellers at the higher levels and so the open interest (OI) in the March futures has increased by almost a million shares. The initial balance range (5,570-5611.70) established by floor traders saw a change of hands and higher volumes (32 per cent) than TPOs (28 per cent). This signals strong resistance for the Nifty at those levels going ahead. The value area (5,538-5,580) saw 70 per cent volume and selling pressure, which hints at a weak undercurrent.

The Nifty is likely to face strong resistance at 5,580 and volume-based support is expected to come around 5,515. The spot Nifty will get price-based resistance around 5,607 while volume support may likely be around 5,517. On a weekly market picture chart, the Nifty March futures is poised to go up around 5,792.50, with strong support expected around 5,460.

The OI build-up in the 5,400-put options suggests support while the build-up at 5,600-call options hints at resistance. The traders were seen covering their positions in 5,200-5,500-strike call options through buy-side trades which indicate that the Nifty may not go below 5,500 in the near future. The participants have built up fresh positions of 1.94 million shares in the 5,600-strike call, which indicates a near-term possibility of a close above 5,600.