The Nifty today faced resistance above 4,650 and closed below the 4,600 level at 4,552 following profit-booking in banking and realty stocks and a fresh short build-up in power, steel and technology stocks.
The Nifty has come back to the trendline resistance zone of 4,500-4,550 and any breakout below 4,480 will lead to a further decline. The index has support around the 20 days’ moving average level of 4,335.
Option traders expect the Nifty to trade below 4,500 as the open interest at (OI) the 4,500 put option has declined by 6 per cent despite clocking a trading volume of 5.56 million shares, while the 4,500 call option has witnessed profit-booking from call buyers.
The Nifty is unlikely to trade above the 4,600 level in the near term as call buyers are booking profits at 4,600 and 4,700 strike prices, while some short build-up is also seen above the strike prices.
The premium in Nifty August futures has decreased further from 13.20 points to 7.75 points, indicating an initiation of short positions. The Nifty August contracts added open interest of 2.92 million shares during the intraday trade, while at the end of the trading session, the open interest declined by 0.43 million shares. This indicates a creation of fresh short positions and profit-booking in long positions.
The Nifty PCR-OI has declined from 1.36 to 1.27 as the call OI increased by 2.75 million shares, while the put OI rose by 1.36 million shares.
