The Nifty closed in a Doji pattern on account of a lackluster volume as investor participation was low due to the nationwide strike to protest the recent hike in fuel prices.
The trading volume in the derivatives segment of NSE fell by over 50 per cent, with the Nifty July futures seeing a volume of around 11 million shares compared to 22-25 million shares on normal days. The price projection on the basis of volume is at 5,265, while the target on the basis of time-price opportunity (TPO) data is 5,273.
However, the market did not react much to the Reserve Bank of India's move to increase key policy rates late Friday. Cues from Asian markets were mixed on the same day, with investors staying on the sidelines ahead of US' Independence Day holiday. The Nifty is expected to remain range-bound in the next few trading sessions and is expected to see strong resistance above 5,300, while maintaining support at 5,220.
Even the July futures saw range-bound trade with 81 per cent of the price action and volume seen at 5,242-5,258. A change of hands by top traders was seen at higher levels, while some short-covering took place at lower levels. The point of control (PoC) area, accounting for more TPO trades, was below the mid-point level. This indicates resistance at higher levels. In the end, July futures closed at a premium to spot and added 744,200 shares in open interest (OI), indicating a long build-up.
The options traders covered short positions in the 5,200-strike call and also built up fresh short positions in the 5,300-5,500-strike calls. In fact, these strike calls together hold 60 per cent of OI, which indicates strong resistance above 5,300. Traders were seen unwinding their short positions in the 5,200-strike put even as they built up fresh short in the 5,100-strike put, as they expect the Nifty to lose support around 5,200 in the near future. Among stocks futures, Bharti Airtel closed at the day’s high on short-covering. Over 80 per cent of the traded volume was above the PoC (Rs 266). The sharp increase in volume at higher levels is expected to drive Bharti Airtel to around Rs 272, while the TPO support is expected at Rs 262.
