The trading pattern in options contracts suggests that the Nifty has strong resistance at the 4500-level. Call options at 4500 witnessed a marginal rise in open interest despite a trading volume of 8.81 million shares, which indicates that traders expect strong resistance above 4,500.
The support for Nifty is seen at 4400 as open interest (OI) for puts at that level increase by 278,550 shares even as the Nifty PCR OI at 4400 strike is above one.
The benchmark indices ended with modest losses on lower level support to key index stocks, such as ICICI Bank, Infosys Technologies, Larsen & Toubro, ONGC and Reliance Industries.
September futures of Reliance Industries were up from the day’s low of Rs 2,100 to close at Rs 2,152.45, while ICICI Bank was rose to Rs 717.25 (Rs 701), ONGC recovered from Rs 1,030 to close at Rs 1,109.
The recovery in case of Reliance Industries and ICICI Bank was due to short covering while in ONGC’s case, it was on account of build-up of fresh long positions.
The Nifty’s September futures recovered from the day’s low of 4,440 to a intra-day high of 4,522 on lower level support and strong volume. However, futures witnessed selling pressure to close at 4481.
The selling pressure in the last one hour of trade curtailed its premium to spot Nifty from an intra-day high of 25 points to 21 points at close. The September futures added open interest of 275,600 shares during the trading session.
It was substantially lower than the intra-day open interest of 2.78 million shares. In the last couple of days, we have noticed that despite the increase in open interest, the market is showing weakness, implying some players are unwinding long positions on fear of a sharp correction.
