Strong resistance likely above 5,300

The Nifty failed to go past 5,300 and closed above the support level on weak global markets. The trading pattern in Nifty July futures indicates the index is likely to hold its short-term support level of 5,230 and may move closer to 5,300. The market picture chart indicates range-bound trading around 5,245-5,275 with strong support at 5,235. The Nifty has been trading between 5,230 and 5,370, taking support at the 20-day simple moving average of 5,230 for the last couple of weeks. The index has crucial resistance at 5,370 for its move above 5,400.

Participants showed lack of interest at higher levels and bought futures at main support levels. This curtailed momentum to break the Nifty either way. The open interest in July futures continues to be high, which indicates that bulls and bears have not given up yet. However, historically, whenever the open interest in Nifty futures has crossed 32 million shares, the market has corrected around 10 per cent. Foreign institutional investors have net sold positions in Nifty futures and stock futures since the beginning of this series, which has considerably weakened the index and key stocks futures.

The build-up in the 5,300-strike call and significant build-up in open interest in 5,400-5,500-strike calls suggest the Nifty has strong resistance above 5,300. Healthy support remains at 5,200 (put open interest at 8.82 million shares) and 5,100 (put open interest at 7.39 million shares). The 5,300- and 5,400-strike puts saw short-covering as traders expected the Nifty to weaken further.

Among stock futures, July futures of Bharti Airtel firmed up on short-covering of one million shares. The stock is expected to move up further around Rs 281 according to volume traders and around Rs 283 according to the per-price projection using time-price opportunity charts.