Volume-based surge for Feb futures seen around 5,580

The Nifty staged a smart rally from the day’s low to close above 5,500 on the back of significant short-covering in index contributors, including Reliance Industries, Infosys Technologies, Tata Consultancy Services (TCS) and ICICI Bank. The call options traders, too, covered their short positions in the 5,500-strike call options and booked profit in the same strike put options. Going ahead, we are now into the expiry week and the put side open interest (OI) build-up has been at 5,400-5,500-strike put options. So, the expiry is likely to be above 5,400. OI build-up in the 5,600-strike call suggests the resistance level.

The top four index movers contributed 36 points in the 60-point surge in the S&P CNX Nifty. The intra-day market picture chart (MKTP) hints at a fresh rally in these contributors. Reliance Industries is poised for a volume-based surge, around 981, with strong support at 928. Infosys Technologies is expected to move up gradually from 3,193 (time-price opportunities, or TPO) and 3,261 (volume). TCS may see a TPO-based upside at 1,155 and a volume-based resistance of Rs 1,175. ICICI Bank is poised to move up 1,067, based on the volume picture chart.

The trade-summary matrix data indicate change of hands trades in the morning session and significant short covering when the index moves up above 5,480. The initial balance range (5,432-5,476) saw 55 per cent volume and 66 per cent TPOs, which hints at price-based short covering at those index levels. The value area (5,426-5,486) saw buy-side trades. The traders covered short positions above 5,486, TSM data suggest.

Going ahead, the spot Nifty is expected to get support at 5,402. The volume-based upside from the day’s low of 5,413 to a high of 5,526 is expected to take the index above 5,600 at 5,670. Nifty February futures settled at a 10-point premium to spot and saw the unwinding of 2.60 million shares in OI, which indicates short covering from bears. The March futures settled at a 19-point premium to February and added 1.66 million shares in OI, which indicates a rollover of long positions. The MKTP data hint at a volume-based surge for the February futures around 5,580.