The initial strength halted at 5,460 for sharp reversal into 5,392 before closing at 5,409. The market is not yet right for strategic investors, with clear establishment of a downtrend in the near or short term with objective at 5,190, says Moses Harding-Head Global Markets Group, IndusInd Bank. The Nifty may see some recovery around 5,426 tomorrow, but the down-side risk is more around 5,341. The last 60 minutes sell-off from the high of 5,445 has set the weakness in the market and there is a possibility of Nifty June futures settling below 5,400 tomorrow. The spot Nifty may see a positive bias up to 5,447 with downside support at 5,352.
For now, we must watch 5,330-5,480 with immediate bias for break of lower end for further extension into 5,230/5,180 which should form a short-term base. The risk of exit by FIIs without much juice in the domestic equity market will keep the bulls away. The options traders are witnessing fresh downside from the current level as the buying activity in 5,200 and 5,300-strike put options has increased considerably in last two days. The change of hands and buy-side trade in the falling market was seen in the 5,400 and 5,500-strike put options, which clearly hints at a very limited upside for the market. Lack of interest in the 5,300-strike call options simply suggests possibility of a breakout below 5,300.
The Nifty June futures settled at a 5-point premium to spot and added 711,900 shares in open interest (OI) through change of hands and some sell-side trades from top traders, indicating short build-up at the higher levels. The June futures closed below the lower band of value area (5,410-5,438) with 20 per cent volume and 8 per cent time price opportunities (TPOs) changing hands below that level. The market saw an unsuccessful range extension above the initial balance (IB) range (5,404-5,434) as the other time frame trader initiated selling pressure at the higher level. The volume-based upsurge in the last 15 minutes trade hints at an index level of 5,425-5,445. However, significant selling pressure an hour before recovery may take the Nifty around 5,341. The OI build-up at put and call options hints at support at 5,300 and resistance above 5,460.