Strong support likely at 5,400

As expected, the Nifty opened gap-up on positive global cues, and witnessed profit-booking above 5,460. It finally closed at 5,415 after getting strong support below 5,400. The Nifty September futures closed at a premium to spot and added 0.52 per cent higher open interest (OI), despite an intraday build-up of over two per cent. This indicates short-covering at lower levels. According to Bloomberg data, there was a change of hands from buyers to sellers with almost 60 per cent of the traded volume comprising buy-side and neutral trades.

Traders were comfortable buying the Nifty futures in the value area (5,410-5,445), which comprised around 70 per cent of the day’s traded volume and time-price opportunities (TPOs). The futures also closed within the value area, hinting at an acceptance of the price range by short-term liquidity providers.

The volume picture chart, however, shows players used the gap-up opening to book profits as the Nifty closed below the initial balance area (5,435-5,465 — also called the first two TPO time periods).

The intraday TPOs and volume data indicate the Nifty has the potential to go up to 5,492, but may face strong profit-booking above 5,480. The trading pattern in the Nifty call options hint at strong support around 5,400 and a bounce-back above 5,500 if the index closes above 5,460. The put options data suggest participants may go for short-covering if the index slips below the 5,400 level. Long-term support for the Nifty is expected to come at around the 5,200 level.

Key technology stocks slipped on concerns of a possible increase in tax payouts, and investors booked profits in some shares due to a lack of fresh triggers. Also, most traded stocks futures – like Tata Motors, State Bank of India, Reliance Industries, HPCL and DLF – closed in a Doji pattern after trading in positive terrain for a better part of the day.