The Nifty July futures closed below 5,600, with the Reserve Bank of India raising the benchmark interest rate by 0.50 per cent to control inflation. The market reacted sharply, down around two per cent, with realty, infrastructure and banks topping the losers list.
The market undercurrent turned weak as traders built short positions in the Nifty 5,600-strike call options by 3.20 million shares and covered short positions in the 5,600 put by 2.80 million shares. The traders expect the Nifty to stay below 5,600 and any upside may be cut short around 5,623.
The Nifty July futures closed below crucial support at 5,590 on account of sell-off after the announcement of the RBI’s monetary policy. Other time-frame traders turned sellers after a change in policy rate by 50 basis points against an anticipated rise of 25 basis points.
The initial balance (IB) range (5,674-5,709), the first two TPO time periods of 30 minutes each, saw 20 per cent volume, and TPOs which indicate price rejection by floor traders. The value area (5,574-5,666) saw buy-side trade below 5,600 and strong selling pressure above 5,620. However, July closed at 5,577 after getting support at 5,555. A significant increase in OI in the 5,500-strike call options and change of hands in the same strike suggest a breakout below 5,500 in the near future.
The market picture chart, however, hints at a volume and price-based decline of around 5,477. With only two day’s left for the expiry of the July series, 5,620 likely to be resistance level for the market in the near future. The spot Nifty is likely to get support at 5,483 and face resistance at 5,623. The July futures settled at par to spot and shed 2.76 million shares in open interest (OI), mostly through sell-side trades above 5,620.
Among stocks futures, Reliance Industries, ICICI Bank and State Bank of India closed on a weak note and MKTP chart hinted at volume-based correction tomorrow.
The MKTP chart hinted at volume based support for ICICI Bank around 1,000 and price-based resistance around 1,045. State Bank of India is expected to move down around 2,361 and may face resistance at 2,445. Reliance Industries closed below the value area after facing resistance around 891. The July futures of Reliance Industries is expected to get support at 864.