Nifty July futures moved between resistance and support and closed in the red, as other time-frame traders stepped in and started selling in response to price above value. The futures closed in a common symmetrical Doji pattern, indicating a balance between buyers and sellers. It moved within the previous day value (5,574-5,640), and saw 60 per cent volume below the day’s closing level of 5,591, indicating strong support at the lower level. However, the 66 per cent time price opportunity counts above the point of control (5,581), suggesting higher level resistance.
The levels to watch are, immediate resistance at 5,675, and strong supports at 5,550 and 5,500. The trading data in the futures and options suggests that the July futures is likely to move within 5,500-5,675, with test/break either way not sustaining. The sell-side trades in the initial balance (IB) range (5,586-5,640) and the strong buy-side trades below 5,591 on Friday suggest the participant wants strong consolidation within the IB range. Also, there is not enough appetite in the market to signal a turnaround, and, hence, the Nifty may not move out of the trading range.
The futures settled at seven-points premium to spot, and added 612,800 shares in open interest (OI) through significant buy-side bias below 5,591. The futures recovered sharply from the day’s low to close at 5,591, which indicates build-up of long positions by bull operators.
The market picture chart indicates price-based resistance for the July futures above 5,675, and support below 5,563-5,530. The spot Nifty may see support around 5,532, and an upside resistance around 5,600.
The trading pattern in the Nifty 5,600-strike call and put options indicates a tug of war between the bulls and bears. The bears have been adding significant short positions in the 5,600-strike call options (weekly OI up by 2.79 million shares), while bulls have been maintaining OI positions in the 5,600-strike put options, despite significant volatility. This means both bulls and bears see strong consolidation around this level, before breaking out of the trading channel. Resistance remains in the zone of 5,700-5,800, while support continues to be at 5,500.