As expected, the Nifty achieved the 5,450 level, but surrendered its gains thereafter to close at 5,386 on profit booking. Larsen & Toubro and State Bank of India stood firm on short-covering even at higher levels. Going forward, the index now needs to surpass 5,454 to meet the target of 5,500. On the lower side, 5,360 is a crucial support for the Nifty, based on time-price opportunity (TPO) data, which suggests price-sensitive buyers are likely to lend support to the market at that level.
IndusInd Bank Head (Global Markets Group) Moses Harding said the momentum from abroad should provide entry into the strong resistance zone of 5,450-5,550 — levels last seen in February 2008, followed by the sharp downturn triggered by the US subprime crisis. There is no momentum to take out this strong resistance zone, given the weak growth numbers and fear of inflationary pressures. The Nifty should remain in the 5,300-5,450 range, while testing support or breaking resistance that is not expected to sustain.
The Nifty July futures closed at a marginal premium to spot, while the open interest (OI) positions remained unchanged at 32.21 million shares, indicating entry of new players. A change of hands was witnessed in the value area of 5,400-5,435 from top traders, which indicate that bulls have booked profit, while bears have created fresh short positions at higher levels.
Options traders see a strong Nifty with support at 5,360, up from the current 5,317. The 5,200-5,300-strike put holds maximum OI among puts. Profit-booking was seen in intraday trading in both 5,300 and 5,400-strike puts through more sell-side trades. The unwinding at the 5,200-5,300-strike calls suggests the Nifty may not go below 5,300 in the near future.
Among stocks futures, Larsen & Toubro (L&T) and State Bank of India (SBI) closed at the day’s high on fresh long build-up. The July futures of L&T settled at Rs 1,882 with 79 per cent of the traded volume changing hands at the Rs 1,835-1,885 level. The TPO target price for L&T is at Rs 1,907, while volume-based target is at Rs 1977.50.
SBI moved in a narrow range on account of a lack of sellers, even at the higher levels. The TPO projection for SBI’s July futures is at Rs 2,480.
