Nifty likely to face resistance at 5,300

Investors were reluctant to buy or sell aggressively today ahead of a closely-watched US job report on Friday. The trading volume in Nifty futures and options (F&O) suggested mere change of hands as buy- and sell-side traders were evenly matched.

Also, it is difficult to predict the market movement for the next week as world markets are open tomorrow, while domestic bourses are closed on account of Gandhi Jayanti.

Key benchmark indices today ended in a Doji pattern after oscillating either ways throughout the day. This indicated uncertainty. The BSE Sensex extended gains for the third straight session, while the S&P CNX Nifty closed marginally lower. The market breadth was weak as small- and mid-cap stocks underwent correction. IT stocks were in demand for the third straight day. However, auto stocks retreated on profit-booking.

Technically, if the Nifty convincingly trades above 5,088, then it is likely to test 5,140-5,190 levels. However, on the downside, 5,020-5,000 levels may act as a support going forward. The call and put options data show support for the Nifty at 4,900 and resistance at 5,300 as the 4,900 put and the 5,300 call have the highest open interest (OI).

The Nifty October futures, however, witnessed creation of short positions as it closed at a 15-point discount to the spot and added an OI of 515,700 shares. The Bloomberg data suggested that almost 56 per cent volume in the Nifty October futures changed hands through sell-side trades, indicating short build-up by bears.

The 5,100 and 5,200 calls witnessed change of hands and call writing as traders expected the Nifty to face a strong resistance if it started trading above 5,100. The 5,000 call too witnessed change of hands as the OI in this call declined by 69,750 shares despite a trading volume of 2.45 million shares.