The Nifty futures faced resistance at 5,060 and closed in a Doji pattern, indicating indecisiveness among traders. The trading volume on the futures & options segment suggests the index is set for an either side breakout in the coming days. The Nifty is expected to face strong resistance above 5,100 and support for the time being is seen at 4,800-4,900.
The Nifty November futures are trading on a par with the spot index, indicating no fresh build-up of long positions. However, the futures shed 539,900 shares in open interest at close of day despite an intra-day build-up of 1.81 million shares, indicating profit-booking by long traders. However, the Nifty December futures closed at 10 points premium to the spot and added 1.38 million shares in open interest, indicating long build-up.
Interestingly, put options traders unwound two million shares in open interest at 4,400-4,700 puts despite the Nifty trading well above these levels (it closed at 5,055). The 4,800 put alone added 1.31 million shares in open interest while 4,900-5,100 puts added 1.12 million shares in open interest, mostly through buy-side trades. This means a few F&O participants expect the market to correct sharply in the near future.
Call option participants have been unwinding long positions at 4,700-4,900 calls on fear of losing extra premium as the current month’s expiry is only six trading days away. The 5,000-5,100 calls saw change of hands and fresh short build-up as open interest in these increased 0.65 million shares despite a trading volume of 16.55 million shares.
The index heavyweight and oil and gas major, Reliance Industries, witnessed profit-booking in the F&O segment as its November futures was down 1.2 per cent with no significant addition in open interest despite a trading volume of 3.43 million shares. The trading volume in options suggests that Reliance may move down below Rs 2,100 levels and is expected to get support at Rs 2,040.