The Nifty opened on a positive note, but faced selling pressure above 4,300 and finally closed at 4,223 with a loss of 22 points. The index has stiff resistance at 4,300 as the open interest (OI) at the 4,300 strike call is the highest at this point. Also, we have seen the OI at this strike in the last four trading sessions declining from 4.37 million shares to 3.52 million shares despite a trading volume of 17.63 million shares, indicating profit-booking from call buyers.
Trading in options contracts suggests that the Nifty could lose its support of 4,200 as a result of a fresh writing of calls. Moreover, support for the Nifty is expected to slip below 4,100 and then to 4,000 because of a fresh buying of the September series puts at these strikes. Technically, the momentum indicators are trading near their oversold zones, which, according to a technical analyst at Ambit Capital, is a weak signal, suggesting that the index could correct till 4,150-4,120 levels.
The Nifty October futures witnessed a rollover of 11.18 million shares, which is considerably higher in absolute terms compared with a rollover of 10.07 million shares during the same period last month. However, today's rollover in the Nifty October series was largely initiated through sell orders, indicating a creation of short positions. Among key stock futures, ICICI Bank, ITC, Larsen & Toubro, ONGC, Reliance Communications and Reliance Industries witnessed an increase in rollovers in the October series, partly due to a long build-up and partly through the creation of long positions.
ITC witnessed profit booking at higher levels as its October futures closed at Rs 194.15 from the intraday high of Rs 200. The October series of ITC added an OI of 1.71 million shares, partly due to a build-up of short positions at a higher level.
