The Nifty closed below its support zone of 4,400-4,500 on weak global cues and profit-booking. Worries about the pace of the global economic recovery and poor monsoon added to the gloom. Metals, realty and oil & gas stocks led the sell-off. By the close of the Indian trading session, European markets were down over 2 per cent. The 158 declines in Dow futures indicated a weak opening.
A blend of unwinding long positions and formation of some short positions are visible in the Nifty August futures.
The Nifty is expected to face a strong resistance between 4,400 and 4,500 as there was some unwinding in 4,400 and 4,500 puts and a fresh build-up of OI in 4,400-4,500 calls.
The 4,500 level, which acted as indicative support for the market in the last two weeks, is expected to face major resistance levels going forward. The 4,500 puts witnessed short covering of 1.02 million shares, mostly from put writers.
Nifty has support around 4,300-4,400 in the near future.
Investors can be bullish above 4,700 and likewise be bearish below 4,350 on closing basis.
Avoid large positions and trade lightly till the indices break out of the current trading range.
MARKETS WILL BE RANGE BOUND TRADE AND ASIAN PEERS ARE TRADING FLAT TO
POSITIVE. OUR MARKETS WILL BE FLAT TODAY.
The intermediate trend is weak despite the net gains last week. The Nifty is stuck between support at 4,350 and resistance above 4,600. There are no definitive indications of possible breakout direction.
A close below 4,400 would signal breakout with a likely further move of 150 points in the direction of breakout. The market did see lower lows this week, which coupled with poor volumes, could mean the intermediate trend is weak despite the net gains.
FII positions as percentage of gross positions has declined sharply reflecting their bias to sell.
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