Resistance likely above 5,690 level

The Nifty July futures gained 30 points on Monday on poor volume, but settled at 5,666 as the bulls favoured towards a consolidation at the most crucial resistance level, before taking this out for a journey into 5,717. However, the listless trading sessions in the first two days of the new series indicates the bears may strike back, for a strong reversal from there into 5,560.

The domestic cues are weak due to weak growth momentum, and, hence, till the strong fundamental factors return, watch for a two-way consolidation at 5560-5800, says Moses Harding, Head, Global Markets Group, IndusInd Bank.

The July futures opened in the green but faced a strong resistance at 5,690, as the other time-frame traders started moving out of the market when the Nifty opened around the resistance level. There was responsive selling from them as the Nifty moved down immediately. The July futures held the lower-end support of 5,635, as the buyers responded to the price below 5,650 to take back into 5,666. The market saw a price-based selling in the initial balance (IB) range (5662-5,690) and buy-side bias in the value-area (5650-5,672).

The July futures settled at 5,666, the area of the most-traded price, which is the median price referred as the Point of Control (PoC). The TPO (time price opportunity period of 30 minutes each) counting above the PoC (5,662-5,664) indicates buyers/sellers equilibrium and, hence, it is now crucial for the bulls to keep the Nifty above 5,664 to maintain an upside bias. The 64 per cent volume in the IB range, through change of hands, indicates entry of new players at those levels.

Nevertheless, the Nifty is expected to face a strong resistance above 5,690 and support below 5,635. The July futures closed at a 15-point premium to spot, and added 980,900 shares in open interest (OI), indicating a build-up of long positions.

The options traders expect the Nifty to face a strong resistance above 5,700 and, hence, significantly increase the short-position in 5,700-strike call options. The OI build-up at 5,600-strike call options, through change of hands, indicates an unwinding of short positions and the build-up of fresh long positions. The support is getting a build-up at 5,600, as the same strike put options added 1.22 million shares in OI.