Both the benchmark indices, the Sensex and the Nifty, today fell around 1 per cent each on profit-booking. As a result, the Nifty failed to stay above the 5,000-mark, a feat of sorts that it achieved only yesterday, as selling pressure in the last part of the trading session brought the index to a close at 4,970.
Rollovers in the Nifty October futures were significantly higher at 6.31 million shares, compared to an unwinding of 5.79 million shares in the Nifty September series. The premium on the Nifty October futures, however, decline to 9 points from 24 points, indicating creation of short positions at higher levels.
According to an technical analyst at JM Financial, the benchmark indices have generated a few bearish triggers after a gap of almost three weeks, and that is likely to have an impact on the price action in the near term.
An unwinding in the 4,900 and 5,000 call and put options was visible in today’s trade, indicating that traders have booked profit in these call options and covered their short positions in put options. Profit-booking in in-the-money call and put options indicates that traders expect the Nifty to settle between 4,900 and 5,000 levels tomorrow.
Today, the options traders were seen taking positions in the out-of-the-money calls and puts of the October series as they expected the market to remain volatile after the expiry of the current series. The 5,000-5,300 strike calls of the October series added 1.38 million shares in open interest (OI), while the 4,700-5,000 strike puts added an OI of 1.39 million shares, indicating that if volatility increased, the Nifty would have support at 4,700 and resistance at 5,300.
The 5,300 call and the 4,800 put hold the highest OI among these options, a fact that hints at resistance and support levels for the Nifty in the near future.