The Nifty traded in the positive territory for most part of the day. The index made an intra-day high of 5,167 but closed at 5,103, indicating caution at higher levels. This means the 5,182 level has acted as a strong resistance for the last four days with crucial support remaining at 5,080. It is difficult to predict when the market will move out of the current trading band as indecisiveness has now spread to stocks futures — most traded Nifty components, such as Tata Steel, Reliance Industries, Unitech, DLF, Tata Motors and Suzlon Energy, closed in a Doji pattern today.
Trading volumes in Nifty December futures suggest that participants booked profit around 5,131 as sell-side volumes rose sharply after the futures started falling from the day’s high of 5,167. The NSE TAME-LITE trading data in December futures show that 11.11 million shares out of the total volume of 13.20 million shares in the December futures changed hands, mostly through sell-side trades, indicating profit-booking. In the end, the December futures closed at a premium to the spot and shed 10,000 shares in open interest.
The 5,100 call saw change of hands as it added 433,450 shares in open interest despite a trading volume of 10.38 million shares. Bloomberg data suggested that traders bought the 5,100 call in the rising market and booked profit when it started correcting. The 5,200 call had significantly high volumes (16.47 million shares), mostly through buy-side trades by participants on expectation of a breakout above 5,182. However, profit-booking was seen in the 5,200 call as the Nifty began correcting after the day’s high of 5,167.
The intra-day play increased considerably in 4,900-5,100 strikes puts as these added 174,650 shares in open interest despite a trading volume of 29.64 million shares. Bloomberg data indicated that traders wiote 5,000 and 5,100 strike calls in the morning session and covered these during the afternoon session.
