The Nifty opened on a positive note but was unable to sustain early gains on lack of buying in the initial balance (IB) range, the first two time periods of 30 minutes each.
The volume in Nifty October futures fell sharply from around 21.55 million shares each in the previous two sessions to 12.55 million shares, indicating lack of buying at higher levels. As expected, the October futures faced strong resistance above 6,190 and maintained support at 6,110 to close at 6,155.80.
However, it continues to trade at 25-30 points premium to the spot due to short-covering exceeding long unwinding.
The Nifty has been consolidating in a small range for the last six trading sessions with lower-end support at 6,020. Technically, the index has started forming a lower-top pattern, which suggests the uptrend in the short term is over and a small correction is expected if the market breaches the 6,020 level.
The participants in index futures do not see any major correction in the near future and expect the Nifty to get volume-based support at 6,127. The time-price opportunities data indicate price-wise support at 6,117. Options traders see limited scope for the market to move up above 6,200 as the 6,200-strike calls saw strong volumes and build-up of short positions. The long traders are cashing out of the 6,200-6,300-strike calls, which is hinting at resistance for the Nifty above these levels. The participants built short positions in the 6,100-strike puts but bought the 6,200-strike puts to hedge long positions in index futures.