Strong support for Nifty at 5,400

The Nifty futures moved in narrow range, lost some volume and finally closed in a Doji pattern, indicating uncertainty at the current level. The European markets opened on a listless note, while Dow Jones futures hinted at a negative opening for the US markets.

The Nifty closed below the opening level with heavy sell-side trades taking place above the value area (5,524-5,436) as participants were cautious at higher levels. In terms of time-priced opportunity (TPO), there was 65 per cent volume and 74 per cent price discovery in the value areas. The 65 per cent volume in the value areas was lower than the normal 70-75 per cent range, which shows that participants are not comfortable building up positions at around these levels.

Traders are unwinding their short positions in the 5,300-strike call and have built up short positions in the 5,300-strike put, indicating a long-term support level. The significant addition of OI in the 5,400-strike call and put through buy-side trades is indicative of a long straddle as participants expect sharp either side movement from the current level. However, significant additions in the 5,500- and 5,600-strike call options in the last couple of sessions indicate a breakout above 5,480, targeting the 5,600-level in the near future.

Among stocks futures, ICICI Bank, Reliance Industries, Bharti Airtel and State Bank of India (SBI) moved up strongly on a long build-up. The August futures of ICICI Bank moved in a narrow range and closed at Rs 951, adding 1.15 million shares in OI, which translates into a long build-up. The TPO remains above the initial balance, which is indicated by the first two TPO time periods of 30 minutes each. This suggests strong support for ICICI Bank at the current level with a price target of Rs 963 in the near future.

Reliance Industries, too, traded above the initial balance area and closed at Rs 1,032 on short-covering. The volume and TPO numbers indicate a price level of Rs 1,044 in the near future.

SBI moved within the balance area in a narrow trading range, which symbolises profit booking. The stock is expected to get strong resistance above Rs 2,625, according to TPO data.