The market remained quiet on the first day of the new series, as participants preferred to sit on the fence amid concerns over raising the US debt limit in time to avoid a default. The Nifty August futures closed in a Doji pattern, indicating an equilibrium between the bulls and the bears.
The trade summary matrix (TSM) suggests a strong buy-side volume below 5,495, and a sell-side volume above 5,500, indicating uncertainty among participants. So, on the first day, the market remained in the hands of the short-term traders engaged in technical trades.
It was a normal trading day on Friday. There was a relatively wide initial balance (IB) range, occupying 98 per cent of the day’s trading range. The day time frame trader was the most prominent participant, accounting for 80 per cent of the volume. Though the market is reasonably well-balanced, there is a slight imbalance in this profile to higher prices. So, the TSM data indicated selling pressure above 5,500 and buying extension from around 5,450. It is very difficult to ascertain the signal from this profile.
The IB range (5,456-5,526) accounted for 98 per cent volume and equal number of TPOs (time price opportunity), indicating price-based buying and selling. The floor traders or the participants in the two TPO time periods were net sellers, while the other time-frame traders were net buyers all through the day. The futures settled at 5,488, a six-point premium to spot, and added 631,650 shares in open interest (OI) through buy-side trades. The market chart hinted upper-level resistance at 5,542, and lower-end support at 5,430.
Call options traders were expecting Nifty to trade around 5,500 and get support at 5,400. The participants were seen buying 5,500-5,600 strike call options, when the Nifty slipped below 5,490. These options together added OI of 1.86 million shares, mostly through buy-side trades, indicating hedging of short positions in the futures. Options participant booked profit in 5,600-5,800-strike puts and built-up fresh short in the 5,400-5,500-strike put options, on expectation of some pullback next week.