Post-election results, Nifty 50 futures recovered almost all the initial weekly losses to close at 23325 on Friday (7th June), gaining 1.86% for the day. The major gainers for the day were Mahindra & Mahindra (5.84%), Wipro (5.11%) and Tech Mahindra (4.57%).
Volume & OI Analysis: The daily average volume remained relatively high last week and stood at 102.13 million, the highest in the last 1.5 years. On Friday the volume stood at 12.92 million. The Cumulative Open Interest (COI) for Friday stood at 14.55 million which was almost at par with Thursday’s COI. The weekly COI though experienced a fall of 14% and most of this fall was experienced on Wednesday when prices started going up after the election results. A fall in OI along with prices going up, signals short covering and we expect the short covering to continue in the forth-coming sessions.
Price and Volume Analysis: Price analysis of Nifty 50 futures indicates further upside as the index futures closed the week with a massive positive “delta” (net of buyers and sellers) of 3.15 million and was able to close on a weekly basis above the weekly “value area”. Though some resistance at 22700-850 may be experienced, but a breakout of those levels may push Nifty 50 futures to further higher levels of 24200-500.
Scenarios: Traders may experience these scenarios in the next few forthcoming sessions
Scenario 1: Prices break out of the resistance of 22750-850 and move towards higher levels of 24200-500 by the end of the week.
Scenario 2: Prices may experience resistance of 22750-850 and fall back towards the weekly value area high of 23050-60 and may experience buying at those levels.
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