The Nifty failed to remain at higher levels. The index closed in a Doji pattern and below the psychological level of 5,000. The trading pattern in Nifty options suggests the index is likely to come out of uncertainty in the next few sessions and even cross the upside resistance of 5,110. Siddhartha Bhamre, head, derivatives, Angel Broking, expects the Nifty to move above 5,100 levels as despite higher intra-day volatility, implied volatility has been steady at around 27, which is giving comfort to options traders.
However, support at the trendline levels of 4,910, that are 38.2 per cent retracement of the rise from 4,576 to 5,110, will be important for the uptrend to continue. Bhavin Desai, manager, derivatives, Motilal Oswal Securities, expects the Nifty to remain range-bound with epicentre of trading likely to be around 5,000 levels. The Nifty has strong support points at 4,900, 4,800 and 4,700 levels and so it not easy for bears to cross these hurdles. Profit-booking is expected if the Nifty crosses 5,100-5,200 levels, he says.
Nifty October futures closed at par with spot while the open interest remained unchanged. Bloomberg data suggested the traders were unwinding short positions when the Nifty was trading below 5,000 levels. The change of hands, mostly through bulk orders, was seen above 5,030 levels, indicating a long build-up. Interestingly, Nifty November futures closed at 5,011 as against the spot close of 5,001 and added 60,005 shares in open interest through buy-side trades. This means the derivative players are taking long positions in the next month’s series on expectation of a fresh rally next month.
Call options traders were seen unwinding short positions at 5,000-5,200 strike calls as they expect the index to move above 5,100 levels in the near future. Put writing was seen at 4,900-5,000 levels, indicating strong support levels.