The Nifty faced strong resistance above 5,480 and closed in the strong support area on short-covering at lower levels. The August futures saw the return of day traders, with over 70 per cent volume changing hands around the value area (5446-5468).
The point of control (PoC), which identifies the price level where the market has spent most time trading, was below the midpoint (high+low/2), indicating loss of support at 5,450. The target price, based on time-priced opportunity (TPO) in such a case, is lower at 5,437.
However, trading in the last 90-minute session suggests the bulls regained control over the market as the PoC moved above the midpoint. The Nifty is expected to face strong resistance above 5,487, based on price projection using volume. TPO-based price projection for the last 90-minute session is around 5,475.
The August futures closed at par with spot and added 481,000 shares in open interest (OI), mostly through buy-side trades, indicating a long build-up. The intraday trading according to on Bloomberg data indicates short-covering below 5,460 and profit-booking above 5,468. Participants seem to have built up fresh long positions when the Nifty slipped below 5,448, according to Bloomberg data.
The trading pattern in the Nifty options showed more buy-side trades in the 5,500-5,600-strike calls in the morning session and a change of hands when the index slipped below the 5,460 level. Bloomberg data indicates a build-up of OI in the 5,300-strike put, mostly through buy-side trade to hedge long positions. The 5,400-strike put added 441,600 shares in OI through sell-side trades and a change of hands as participants expect the Nifty not to go below the 5,400 level in the near future.
Among stock futures, Tata Motors rose 6.62 per cent on a build-up of long positions. The August futures of Tata Motors added 2.16 million shares in OI, mostly through buy trades. The price projection using the most-traded TPO time periods indicates a price level of Rs 1,007 for August futures.
