Upside of 5,500 a distant dream now

The Nifty tested its support level of 5,300, only to see an intermediate bounce-back to close in a Doji pattern at 5,320. However, a Doji pattern on the day of the derivatives’ expiry has put a big question mark over the continuation of the bull rally in the July series. While global markets were in the red, the rollovers in the July series were at a discount to spot and open interest (OI) build-up was higher than in previous years.

This indicates a soft opening on the first day of the new series. For the time being, the upside target of 5,500 — as calculated on the basis of the inverted Head & Shoulder pattern — seems to be a distant dream.

The Nifty July series saw only 17 per cent of the trades above 5,351, indicating resistance at higher levels. Major participants were indulging in a change of hands, rather than building long positions. However, a long build-up was seen between 5,310 and 5,350 from retail as well as top traders. According to market data, a price projection of 5,409 can be made on the basis of time-priced opportunity (TPO).

On the basis of volumes, the price projection is at 5,415.

However, the short build-up in the 5,300-5,400 strike calls of the July series suggests this may not happen immediately. Still, support is expected at 5,270-5,300. Infosys Technologies moved in a narrow range and achieved the TPO target of Rs 2,820, before finally closing at Rs 2,813 on profit-booking. Traders are expected to come under fresh selling pressure in Infosys in the July series. ITC remained strong and closed almost around the TPO target level of Rs 306. The July series saw over 60 per of ITC’s volumes being struck by top traders above Rs 307, indicating a long build-up. The stock is expected to move around Rs 310, according to TPO data.

Larsen & Toubro, which showed some weakness during Wednesday’s trade, bounced back smartly and closed at Rs 1,791 on a long build-up in the July series. The stock is expected to move around Rs 1,814, according to TPO data. Reliance Communications closed at the day’s high on short-covering and a long build-up in the July series. The stock is expected to get support at Rs 184 and is likely to move to around Rs 207 in the new series.