The Nifty September futures maintained support at 4,800 and closed at 4,835, down 49 points, on concern that policy makers worldwide might not be able to avert another recession. The market undercurrent remains weak on the weekly chart and, hence, the weak global markets could lead to a significant fall to around 4,600 next week, as suggested by the market picture chart.
The downward movement, from the high of 5,175, points to more severe pain for the market in the days ahead. The market next week will be trading for the expiry of the September series, and if the global cues remain weak, the recovery in the Nifty may not go beyond 4,935. Nevertheless, the open interest (OI) build-up at 4,800-strike call and put options is hinting a sub-4,800 level.
There are no clear recovery signals. The floor traders were net sellers in the price range (4,848-4,892) established in the first two TPO time periods of 30 minutes each. The trade summary matrix for the entire trading session showed an equal number of buyers and sellers in the September series. However, the intra-day trading was more or less tied to global cues. The participant covered short positions after a strong opening for the European markets, and booked profit when these slipped into the red zone. No wonder, the futures recovered sharply from the day's low of 4,818, to a high of 4,935, but surrendered some of the gains to settle at 4,870.
The futures settled at par with spot, and saw an unwinding of long positions of three million shares during the intra-day trade. The short-covering was evident in the 4,500-4,800-strike put options and the fresh short build-up seen in the 4,800-strike call options, indicating a weak undercurrent. The Nifty may see trade below 4,800 next week, as the OI in the 4,800-strike put options declined by 964,150 shares, while the same strike call options added 1.56 million shares.
The day's top losers, Reliance Industries and ICICI Bank, are expected to see a fresh correction. Reliance is expected to move down around 760, with an upside resistance at 793. ICICI Bank may fall around 815, with an upside resistance around 865.