The benchmark indices surrendered early gains in the last hour. The FIIs had build up short positions in stock futures during the last three consecutive days and this triggered profit-booking towards the close of trading.
The Nifty August futures opened above the resistance level of 4600 and touched an intra-day high of 4629, only to settle at 4526. The premium also declined to nine points from yesterday’s 25 points, indicating fresh build-up of short positions. A total of 36.16 million shares were traded at an average price of 4581 as against the intra-day high and low of 4630 and 4509 respectively.
The Nifty heavyweights such as Reliance Industries, ICICI Bank, Larsen & Toubro, BHEL and State Bank of India surrendered their earlier gains. The August futures of Reliance Industries ended at Rs 2306.20 compared to the day’s high of Rs 2362. The open interest declined by 1,485 contracts, despite trading volumes of 76,625 contracts, indicating profit-booking at higher levels.
Options traders booked profits in in-the-money (ITM) call options at 4300 and 4400 strike prices as the open interest declined by 140,000 shares despite trading volumes of 1.3 million shares.
Interestingly, call buyers who booked profits at 4500 and 4600 strike prices yesterday sold calls at 4500 and 4600 strike prices on Wednesday. Call selling was also seen at 4700, 4800 and 4900 strike prices as the NSE order book data revealed more sellers than buyers.
Profit booking of calls at the 4300 and 4400 strike prices and fresh selling of 4500-4900 calls suggest an impending end to the short-term rally that began last Friday.
