The market witnessed some recovery in the second half of the day after trading in a narrow range in the first half. Nifty closed up by 0.12% compared to the previous close. The index futures closed at a discount of 1.40 points to the spot market.
Futures have traded at a discount for most part of the month and we are yet to witness any short-covering in the markets. The same can also be judged in the open interest built-up in options segment where short positions are being built in the 5100 & 5200 calls, which are acting as a near-term resistance to the market.
On the puts side, the maximum open interest stays at 5000 strike and we have seen a continuous built-up of short positions at this strike during the month. This level will thus act as a strong support for the current expiry. The ATM implied volatility has cooled off from 27-28% levels to 22% in the past two days, indicating that the market will likely see some consolidation.
For the month, the maximum open interest stands at 5000 levels in puts and 5200 levels in calls, indicating that the market will change the trend once any of these levels are breached.
The current put-call ratio (PCR) stands at 1.1 which shows the markets are moving towards a comfort zone. Technically, Nifty has a strong resistance at 5150-5180 levels. The next uptrend will start if the index crosses these levels.
Also, 4980 being the 200-day DMA is expected to act as a good support level in the near term. The long-term support for the market stands at 4675 and is a crucial level for investors looking at long-term investments. The market seems to be a bit jittery as of now and investors should wait for some more consolidation before taking any fresh positions.