Volume-driven selloff in index and stock futures is likely to continue tomorrow as the Nifty October futures’ close of 6,144 was way outside the value area (6,166-6,218).
A closing way outside of the value area suggests a late need to either liquidate or enter the market. The volume picture, which provides a real-time insight into any given time-price opportunities (TPOs), saw a steady downward movement in the last two hours of trade. This, according to the market picture chart provided by Bloomberg, can take the Nifty below 6,100, with volume-based support around 6,055.
The initial balance range (6,198-6,226), the first 60-minute period, principally established by the liquidity providers, saw 62 per cent TPO periods and 46 per cent volume, which indicate lack of interest from value buyers at higher levels. The value area saw 71 per cent TPOs and 54 per cent volume, mostly through short-covering by small traders and profit-booking by big traders. Bloomberg data show the top traders – a single trade of more than 100 contracts each – were sellers on the last three days while retail traders covered their short positions.
The Nifty has been trading in the 6,150-6,250 range for the last three days due to selling at higher levels from liquidity providers. on Thursday, the Nifty slipped below 6,150, with 33 per cent trading volume changing hands below 6,166.
The open interest in Nifty October futures has fallen by over 1.50 million shares in the last couple of trading sessions. This means bulls have started unwinding positions while bears are waiting for an opportune time to cover their short positions. The trading in call options shows change of hands in the 6,000-6,200-strike puts, which hints at a fresh correction in the Nifty
Tata Steel and Larsen and Toubro closed on a weak note while Reliance Industries and Tata Power saw profit-booking. Tata Steel closed at Rs 654 from a high of Rs 683 on profit-booking. The TPO projection indicates fresh downside for the October futures of Tata Steel around Rs 632. Tata Power came off sharply from a high of Rs 1,472 to close at Rs 1,440. The stock can go up to Rs 1,515 based on volume-based projection.
