The Nifty September futures closed at a discount to spot below 5,600 on profit-booking at higher levels. Options traders booked profit in the 5,500-5,600-strike calls and covered short positions in the 5,500-5,600-strike puts, hinting at a weak outlook for the Nifty. The trading data in Nifty futures and key stocks futures, as well as the weak global markets, indicates a soft opening tomorrow.
The Nifty futures crossed the 5,600-mark, but moved down quickly to close at 5,585 from an intraday high of 5,616 on profit-booking. Positional traders were not willing to buy the Nifty above 5,585 and there were no sellers below 5,570. The point-of-control (PoC) – the price level where the market has spent the most time trading – saw double distribution at the 5,580-5,590 price level, which means there is a fight brewing between the bulls and bears.
Participants bought and sold Nifty futures in the initial balance (IB) range (5,565-5,595) – the first two time-price opportunities (TPOs) time period – with a formation of 80 per cent volume and TPOs. The IB range is principally established by the liquidity providers and is also an important level for trading strategy. The Nifty closed within the IB range after moving higher to 5,616, which shows there is some resistance at higher levels.
The Nifty September futures closed at a discount to spot and added 1.36 million shares in open interest (OI), which indicate a build-up of short positions. A market picture chart on the basis of Bloomberg data shows the mid-point above the PoC. This means some new lows will be required to move the mid-point below the PoC. In other words, the Nifty is projected to move down to around 5,562 during Wednesday's session. A price projection on the basis of volume indicates support at the 5,552 level.
The options traders sold in the 5,500-5,600-strike call and built fresh shorts in the 5,700-strike call. Significant put writing was seen in the 5,500- and 5,600-strike puts options. This means the next two days will witness a range-bound market with strong support at 5,500 and resistance above 5,600 levels.
