The Nifty July futures opened on a positive note on the first day of new series, but after facing strong resistance above 5,702 it settled in the red on profit-booking. We had indicated a slowdown in the momentum and stated the stability around 5,660 will be very crucial to keep upside bias.
The July futures closed at 5,635, as the other time-frame traders started moving out of the market when the Nifty opened around the 5,700 resistance. There was responsive selling from them as the Nifty moved down immediately, after opening above the value-area as the sellers respond to the price above value.
The July futures settled at 5,635, the area of the most traded price, which is the median price referred as the Point of Control (PoC). It was net selling day as the TPO (time price opportunity period of 30 minutes each) counts above the PoC were significantly higher at 72 per cent. It is now crucial for the bulls to keep the Nifty above 5,635 to maintain an upside bias. The 30 per cent volume in the initial balance (IB) range (5,666-5,702) by the floor traders indicates the market is slowly moving into the bear’s hands and the bulls have to go for a volume-based rally to take the Nifty above 5,666.
The trade summary matrix (TSM) data hints at change of hands in the IB range and buy-side bias in the value-area (5,626-5,672). The TSM data shows 62 per cent volume below 5,650, indicating a higher-level resistance. Nevertheless, the Nifty is expected to face a strong resistance above 5,660 and the market picture (MKTP) chart hits at a trade below 5,600, if the Nifty fails to hold the 5,635 level. The volume-based sell-off seen on Friday is expected to continue on Monday. If the Nifty slips below 5,600 it will get support at 5,577-5,565, the MKTP chart suggests.
The options traders expect Nifty to face strong resistance above 5,700 and, hence, significantly increase the short-position in 5,700-strike call options. The open interest build-up at 5,600-strike call options through sell-side trades indicates the market may slip below 5,600 next week. The long unwinding in 5,400-5,500-strike price call options indicates profit booking from the long-traders. The support is getting build-up at 5,500, while the resistance is seen above 5,700.