As expected, the spot Nifty and March futures achieved our time price opportunities (TPO) based target and closed at the day’s high on a perfect non-trend day. The non-trend day formation occurs rarely and involves the day traders than the other time frame traders. No wonder, the initial balance (IB) range (5,514-5,544) saw 85 per cent volume and 95 per cent TPO counts indicating a tight consolidation from floor traders. The market is said to be at balance in a non-trend day and is often a precursor to a new vertical move.
Markets appear to be shifting focus from current uncertainties on account of earthquake and tsunami in Japan. The market undercurrent remained positive as Nifty closed above the value area of the day. The trade summary matrix (TSM) data suggest short covering in value area and also IB range. The short positions was got covered when the Nifty March futures started convincingly above 5,520. The Nifty futures also closed above the value area (5,520-5,538) and saw significantly higher volume, almost 40 per cent, above point of control, the area of most traded price.
After responsive buying on Monday, the Nifty futures saw a strong consolidation above 5,500. The futures closed at a 23-point premium to spot and shed 2.40 million shares in open interest (OI) indicating short covering. The TSM data sourced from Bloomberg saw buy-side trades in the afternoon session. The market has also given a strong bullish signal to trading activity in the derivative segment indicating buying range extensions. A buying range extension is a fairly strong breakout type of signal.
The price projection using TPOs and volume picture chart suggest target of 5,580 and support at 5,500. The spot Nifty is likely to move up around 5,547-55. The four days up move in the market is expected to take the Nifty above 5,600 to around 5,620 if the 5,580 is broken with strong buy-side volume. The Bank Nifty is expected to move up around 11,175-11,195 and to get support around 11,000.
SBI is expected to move up around 2,689 and get support below 2,627. ICICI Bank is likely to move up around 1,072 and get support at 1,050. Reliance Industries is expected to see fresh upside around 1,027 and support at 1,010.
Options traders covered short positions in the 5,400-5,600-strike call options and built fresh short positions in the 5,500-5,600-strike put options. The OI build-up at 5,500-strike put options in this week hints at new support level for the Nifty.
