Futures to trade around 4,950 next week

Nifty September futures opened on a listless note and faced resistance above 5,150 as other time-frame traders turned sellers. The trade summary matrix showed change of hands in initial balance (IB) (5,132-5,155), indicating short build-up by new players. The market profile for the day suggested responsive selling, with sellers putting there shares on the block as soon as the index opened above the previous value area. This dragged the prices lower, right from the opening, and the market remained in the selling mode.

The September futures closed below most crucial support at 5,080, and hence there is a possibility of fresh sell-off when market opens for trading next week. The near-term bullish mode is intact for attempt at 5,210 ahead of 5,325. There has been significant dilution in global cues and demand for interest rate pause mode from RBI provides greater comfort to the bulls, says Moses Harding, head, global markets group, IndusInd Bank. FIIs’ good interest in the market is positive and would attract domestic investors into equity asset.

The market undercurrent turned bearish and that could take the September futures around 4,950 next week. The September futures traded at discount throughout the day and added 1.89 million shares during intra-day indicating short build-up. The futures finally settled at 5,052 with unwinding of 395,050 shares in open interest in the end.

This indicates long unwinding and build-up of fresh short positions by new players. It was also a net selling day as the Nifty closed below the point of control (5,120) with 64 per cent TPO counts below that level. The September futures also closed at day's low with 21 per cent volume below lower band of value area (5,070-5,134), indicating significant selling pressure.

Futures would now face strong resistance above the PoC to get back into 5,150-5,200. The market picture chart hinted at volume-based selling for the September futures at around 4,950. However, the pullback, if any, on account of short covering would take the index to around 5,180, the MKTP chart suggested. Selling pressure in the initial balance (IB) range (5,132-5,155) indicated strong resistance around those levels.