The Sensex is likely to close below 14,000 and Nifty should breach the 4,300 mark before the expiry of the derivatives contract.
Recent records suggest that indices close below their previous month’s levels on the derivatives expiry date if the preceding Friday witnesses bearish sentiment, as was the case today. Profit-booking dragged the benchmark indices near its support level of 4,300 today.
There was call selling at 4300 and 4400 strike prices and put buying at the strike price of 4400. The benchmark indices are unlikely to maintain those levels as the options traders are willing to pay a premium for in-the-money call and at-the-money put options.
There was net buying in index futures and net sales in index options on July 24, going by the derivatives trading data for the day. The FIIs wrote calls at 4300 and 4400 strike prices and bought puts at the strike price of 4400.
The Nifty is likely to find support between 4200 and 4300. The put call ratio (PCR) at the strike price of 4200 is 2:1, while the PCR at the 4300 strike price is 1:1, suggesting support at these levels.
The Nifty July and August futures contracts closed at a premium, indicating long rollovers at lower levels. The intra-day short positions in Nifty July futures were squared off and rollovers in August futures came down by 0.5 million shares in the after-trade session.
With the July futures to expire in four days, the Nifty August futures witnessed an open interest build-up of 9.5 million shares. This is marginally higher from 9.1 million shares seen during the same time last month.
