Crossing 5,500 will be difficult for Nifty

The Nifty opened on a positive note on Friday and went on to trade higher. However, it could not continue with the upward momentum and, in the second half of the trading session, it started its slide, after facing resistance above 5,480.

The 50-share index tried to break through the crucial resistance of 5,500 twice in the current series, but failed on both the occasions. Technically, the Nifty is back above the bearish wedge, but the high of 5,491 has still not been taken off, so the crossover of 5,500 level seems rather difficult.

The Nifty August futures closed at a premium to spot on short-covering from bears in the 5,055-5,065 range. Top traders covered short positions when the Nifty moved above the 5,465-level. Some strong resistance remains above 5,480, again indicating that a crossover of the 5,500-level is likely to be difficult. The Nifty August futures saw a change of hands as open interest (OI) increased marginally by 0.35 per cent, despite a trading volume of 17.31 million shares. Traders booked profit in the August futures towards the end of the day as European markets drifted lower, while Dow Jones Futures turn red. The Nifty could not hold the higher level as participants moved out of the price range formed around 1-2 pm on expectation of a selling pressure.

Market picture charts hint at selling pressure above 5,497. The August futures recorded a trading volume of around 50 per cent and the higher number of time-price opportunities (TPOs) was in the 5,055-5,470 range. Traders covered short positions at the 5,300-5,400-strike calls as the August futures closed above the resistance level of 5,450. The 5,300-strike put witnessed profit-booking, while the 5,400-strike put added an OI of 789,050 shares, and the 5,500 added an OI of 994,200 shares, mostly through sell-side trade. This may lead to a positive opening on Monday.