Expect resistance around 5,767

As expected, the Nifty reacted sharply from the day’s high of 5,760 and closed near support level of 5,664, as the other time-frame traders were active sellers. We had indicated on Thursday that the current rally may end around 5,800 and there is a risk of a gradual reversal into strong support at 5,560. The selling pressure is expected to continue, and the volume-based selling may take the Nifty around 5,587 next week.

The market on Friday saw a selling range extension as the Nifty moved below the initial balance (IB) (5,720-5,760) and closed below the value area on account of active selling from other time-frame traders.

The time price opportunity counts in the IB range were higher (59 per cent) than the volume (52 per cent), indicating price-based selling. The trade summary matrix data shows short covering from small traders and profit booking by top traders.

The selling pressure would take the Nifty July futures below 5,600, and any upside is expected to face resistance around 5,787.

The spot Nifty is expected to get resistance at 5,767 and support at 5,602. The volume in the IB range was significantly higher, 52 per cent, mostly through change of hands, and, hence, the Nifty may not go above the IB range in the immediate future.

The market undercurrent after Friday’s trading sessions turned weak as the premium to July futures plunged to 12 points from 21 points, on account of profit booking. The key losers, such as Reliance Industries (RIL), Larsen & Toubro (LT), ICICI Bank, HDFC and ITC closed below the value area on Friday on account of selling pressure from other time-frame traders. The market picture chart suggests fresh downside for RIL around Rs 854, LT, Rs 1,797, ICICI Bank, Rs 1,052, HDFC, Rs 699 and ITC, Rs 198.

The options traders covered short positions in the 5,700-strike put options and build-up short positions in the same strike call options. The 5,800-strike call options added more than two million shares in OI through sell-side trades, and, hence, a strong resistance is seen above 5,800. The significant OI build-up at 5,500-strike put options indicates a short-term support.