As expected, the Nifty July futures faced strong resistance above 5,590 and managed to settle around major support (5,550) after testing 5,530. The Nifty is likely to break below 5,500 with lower end support expected to come around 5,485. The July futures closed around the lower band of value area (5,544-5,572) with 74 per cent above point of control (PoC-5,547) which indicates price-based selling in the value range.
The initial balance (IB) range (5,538-5,586), the first two TPO time periods established by floor traders, accounted for 95 per cent volume and TPOs, mostly through change of hands but sell-side above 5,570. This clearly means strong resistance for the Nifty above 5,570-5,590.
The Nifty will get closer to 5,600 now, but there is a possibility of July futures testing the lower-end support at 5,485. Some positive momentum is possible only if the Nifty move up above 5,600. The poor volume and selling pressure in the IB range suggests fresh correction. Though the Nifty saw strong buy-side trades below 5,540, the significant TPOs above 5,547 indicate upside resistance. The market picture chart hints at a volume-based support around 5,505 and price-based resistance around 5,580. However, the fall from Tuesday’s high of 5,660 to low of 5,532 can take the July futures around 5,485, the MKTP chart suggests.
The key index heavyweights settled on a weak note and the MKTP change hints at fresh correction in these stocks tomorrow. The July futures of Reliance Industries closed at the day’s low and saw strong selling below PoC-873. The MKTP chart suggests volume-based decline around 844 and price-based resistance above 874. HDFC Bank is expected to move down around 481, ICICI Bank around 1,031 and State Bank of India around 2,441-2,417. ITC is expected to see volume-based upside around 213.
The options traders stepped up short positions at 5,500-strike call options by adding 1.46 million shares through sell-side trades. The put writers covered their shorts in the 5,600-5,700-strike puts on expectations of fresh correction. The 5,500-strike put saw buy-side volume which indicates hedging of long positions in the Nifty futures. The buying in 5,400-strike put and unwinding more profit booking in the same strike call options indicates weak undercurrent.