Sept futures may face resistance above 5,160-5,180

The Nifty September futures faced resistance around the recent high of 5,174, as participants preferred to sit on the fence after the International Monetary Fund (IMF) lowered GDP growth forecasts to 7.78 per cent from 8.2 per cent earlier. Nevertheless, the September futures did not slip below 5,100 and settled at 5,135 after testing support at 5,113.

The market outlook for the short term remains neutral, with strong resistance above 5,200 and support at 5,030. There are no clear signals to chase gain beyond 5,200, so stay tuned to domestic and global cues to get clarity on the immediate directional break-out, says Moses Harding, head, global markets group, IndusInd Bank.

However, despite weak Asian and European markets, the Nifty managed to close above 5,100, as the new set of players that entered the derivatives segment in the last few days remained neutral. The September futures settled at a premium to spot and saw unwinding of 1.14 million shares in post-trading settlement period, indicating short covering from bears.

The market picture (MKTP) chart had multiple Point of Control (PoC) and 52 per cent volume, mostly through change of hands in the PoC range of 5134-5,152. The strong volume at PoC range suggests consolidation in that range. The floor traders were net buyers in the initial balance (IB) range of 5,140-5,151 and booked profit in the 5,151-5,174 range.

The market profile on Wednesday suggested a neutral day, as both buyers and sellers were active and in agreement on the value of contracts. The market is usually close in the middle of the day’s range in this type of profile. The MKTP chart for the day is hinting at resistance for the Nifty September futures above 5,160-5,180 and strong support at 5,101 tomorrow. If global cues remain strong, the September futures could move up around 5,220.

The day’s top losers, Reliance Industries and TCS, are expected to see range-bound trading, with strong resistance for Reliance seen around 843 and for TCS around 1,049. ICICI Bank and State Bank closed in the green, hence, the market picture chart hinted at fresh upside for ICICI Bank around 915 and State Bank around 2,022.

The OI in the 5,100-strike put options at 5.64 million shares, as against 4.38 million shares in the same strike call options, indicate that the 5,100 level may act as the support level for the Nifty.