As expected, the Nifty moved in a narrow band after opening around the resistance level of 6,020 on poor volumes at higher levels. The September futures closed at 5,968, almost near the support level, as participants covered short positions when the Nifty slipped below 5,960.
Almost 75 per cent of the volume changed hands at the index level (5,665-6,018) established by floor traders and day traders during the first two time-price opportunity (TPO) periods of 30 minutes each. This means participants are very cautious about trading at both higher and lower levels and are waiting for an either-side breakout in the near future.
On a daily market picture chart, the Nifty is expected to face a strong supply between 6,020 and 6,047, indicating there will be some resistance above 6,050. The Point-of-Control (PoC), the price level where the market has spent the most time trading, saw multiple distributions of TPOs. But the PoC was below the midpoint for the day, hinting that bulls have lost control of the market.
The price projection for the index on the basis of TPOs is at 5,942, which is also the support level for the Nifty.
However, the TPOs in the last two trading sessions signal weakness at 5,906-5,909 and even a dip around 5,880 in the near future. The Nifty September futures, which closed at a premium to spot, shed 1.71 million shares in open interest (OI), mostly through unwinding of long positions. The October futures showed significant long positions, adding 947,650 shares in OI before closing at 5,985 — a 14-point premium to current month’s futures.
Profit booking was seen in the 5,800-strike call and a fresh short build-up was seen in the 5,900- and 6,000-strike calls. The 6,000-strike put saw some buy-side trades when the Nifty started trading below 6,000. The 5,900-strike put holds the highest OI among put options. This means the Nifty is expected to trade 5,900-6,000 in near future.