The Nifty opened on a steady note, rose to the day’s high of 4,524 and closed 0.74 per cent lower on profit-taking in index heavyweights. However, today’s market pattern suggests that traders are not willing to sell index futures below 4,470 as average trade in Nifty July futures changed hands at 4,474. This means traders booked profits in key index stocks at higher levels but did not create fresh short positions. The market expects the Nifty to consolidate around 4,500 before climbing back to the pre-Budget high of 4,709.
Nifty July futures closed at a premium to the spot and shed an open interest (OI) of 283,250 shares compared with the intra-day addition of 2.32 million shares. The August futures closed at a premium to the July futures and added an OI of 522,650 shares. This means bulls were booking profit in the July futures and rolling over their long positions in the August futures. However, despite the intra-day increase in OI in the last few trading sessions, the net OI in the Nifty futures has declined by over 3 million shares, indicating short covering by bears.
According to a technical analyst at JM Financials, the Nifty has huge support around 4,400, which is now the updated base. Any decline close to this level will be a buying opportunity for traders. The 4,500 call options added OI of 265,150 shares, mostly through buy orders. The 4,700 call added OI of 364,800 shares. It has the highest OI among call options. This means the Nifty is expected to move in the range of 4,400-4,700 till the expiry of the July series.
The 4,400 put has added OI of 740,950 shares, mostly by put writers. The 4,300 put’s OI is at 5.08 million shares, which is the biggest among all put options. This means the index has strong support at 4,300 but may not breach 4,400 in the near future
