The Nifty opened on a positive note on Friday but, by the end of the trading session, it closed in a Doji Pattern. This indicates uncertainty at higher levels. The 50-share index s expected to open on a steady note on Monday and is likely to face strong resistance above 5,460. The market picture chart suggests the Nifty is expected to get volume-based support at the 5,412 level.
The intraday trading pattern in the Nifty July futures indicates a change of hands among top traders at higher levels and some profit-taking in the value area (5,435-5,460). The July futures closed at a discount to spot and shed 1.35 million shares in open interest (OI), while the August futures saw a decline in the cost of carry and added 1.65 million shares in OI, indicating fresh short positions were being built up at higher levels.
On the option front, implied volatility has decreased marginally. This signifies that buying may continue to emerge at lower levels and that the market will continue to trade with a positive bias. The 5,400-5,500-strike calls witnessed a change of hands and profit-booking, which shows that participants expect the Nifty to be range-bound during the expiry week and is unlikely to cross the 5,500 level immediately.
At the same time, the trading pattern in the Nifty put options suggests the index is unlikely to fall below the 5,400 level in the near future. The 5,400-strike put added 1.05 million shares in OI through sell-side trades, while the 5,500-strike put added 203,650 shares in OI through buy-side trades. This means 5,400 is expected to be the new support level for the Nifty, even as it faces strong resistance around the 5,500 level.
Participants have started building positions in the 5,500-5,700-strike calls and 5,300-5,500-strike puts of the August series. This means traders expect the Nifty to move up further to around 5,700 in the new series, if it expires above the 5,500 level.
