The Nifty May futures moved in a narrow band and settled in a Doji pattern on a closing basis on account of buyers/sellers equilibrium. A Doji forms when the opening price is the same or very near to closing price. The Doji today had a relatively tight range from high to low (5,452-5,404) and volume in the May futures also declined by almost 5 million shares to 11.86 million shares. The market profile classification suggests a non-trend day which occurs rarely and involves the day trader more than another time-frame trader.
The market is said to be at balance in a non-trend day and is often a precursor to a new vertical move. However, the expiry of the May series in just five days away and the open interest (OI) build-up at the call and put options hints at a range-bound market. The May futures are expected to face strong resistance above 5,465-5,480 and significant support around 5,400-5,375. The trading in the initial balance (IB) range (5,429-5,452) and in the value area (5,412-5,432) suggests resistance above 5,430.
The trading volume in the last couple of days and the OI build-up in the Nifty futures and options and stocks futures indicate a lack of interest among participants. The futures are unlikely to go below 5,400 level immediately, but the build-up in the 5,400-strike call options this week hints at a sub-5,400 level next week.
The Nifty May futures closed at a 4-point discount to spot and unwinding of 540,400 shares in OI through buy-side trades, indicating short covering from bears at the lower level. The market picture chart hints at an immediate support at 5,406 and around 5,375 thereafter. Resistance is expected to come above 5,460. The Bank Nifty May futures may face resistance above 10,640 and volume-based support is seen below 10,300.
The May futures of Larsen & Toubro closed at the day’s high on short covering after the company announced better than expected fourth quarter results. Significant buying was seen above the point of control (PoC) as the stock closed at the day’s high and there were 76 per cent TPO counts above the PoC (1,490). Going ahead, L&T may move up further around 1,667, with lower-end support seen below 1,490.
