Nifty expiry seen around 5,465-5,500

As expected, the Nifty fell below 5,500 on profit-booking, but closed around the short-term support level, which indicates expiry of the August series in the band of 5,460-5,500.

The time-price opportunity (TPO) period of 30 minutes each indicates a revisit of 5,500 with volume-based resistance above 5,525. Nifty August futures carry an open interest of 16.54 million shares (13.83 million shares in July series) on the last day of the expiry and so aggressive profit-booking at the higher level is likely. Nifty September futures closed at the support level and added 6.30 million shares in open interest, mostly through buy trades below 5,490, indicating long build-up.

Technically, the Nifty has taken support at the 20-daily moving average of 5,463 and hence that is going to be crucial. Tomorrow being the last day of the August series and with the world markets in the red, we may see an increase in volatility. The global bourses are weak (expect Dow Jones to move below 10,000). RBI has also sent a clear signal on maintaining tight liquidity to fight inflation. Given this scenario, it is not the time for strategic investors to stay invested in equity, says Moses Harding, head, Global Markets Group, IndusInd Bank. It is prudent to shift investments into debt to enjoy time value and await better value on equity assets.

Sensing weak global cues and profit-taking at the 5,400-strike call options, the participants increased short positions in the 5,500-strike call on expectation of a weak August series expiry. The short covering of over 1.50 million shares was seen in the 5,500-strike put at a weighted average premium of Rs 29.25 per share, which suggests the Nifty is likely to see expiry between 5,465 and 5,500 tomorrow.

The open interest build-up in the 5,400-strike put and the 5,500-strike call options suggests the index has strong support at 5,400 and resistance above 5,500. The 5,400-level support and the 5,500-level resistance are likely to be continue in the September series, data suggest.