Key benchmark indices fell for the second straight day as investors booked profit after the recent sharp gains. The Nifty maintained its support of 4,400 while Nifty futures closed at a premium to the spot, indicating profit booking by bull operators. The market is in consolidation mode and the next support is seen at 4,360. The buy-on-decline approach should continue for the upside target of 4,650 with stop-loss at 4,300 for trend reversal.
Nifty July futures continue to trade at a premium as bears have been covering their short positions at lower levels. Trading data suggest that short covering in July futures was seen around 4,400-4,450 while profit-booking was seen above 4,500. Nifty August futures added an open interest (OI) of 606,150 shares at a premium to the July futures, indicating building of long positions.
With only six days left for the expiry of the July series, OI in the July futures is considerably lower at 19.94 million shares compared with 30.85 million shares in the same period in the June series. This means bears have covered their shorts and are now waiting for the index to build fresh short positions. The 4,400, 4,500 and 4,600 calls of the July series witnessed fresh buying when the index was around 4,400-4,420. This means we may see fresh pull-back if the Nifty holds its support of 4,360.
