Update for 28th July 2011

 The Battle for the 5500 Strike is On !  

The major option position build up at the 5500 strike is acting as a major battle point in today's trading, although some of the Put build up has moved to the 5400 strike. Some more Call selling was observed at the 5500 strike. Though the option writers would like an expiry at around the 5500 strike, it is still unclear whether this will be managed because of the external factors. The next support for the market below the earlier 5500 - 5520 support is around the 5350 - 5400 area. 

   Nifty Futures - Daily Chart   

Update for 27th July 2011

 Nifty Future Back to the 100 DMA !  

Following the higher than expected hike of interest rates by the RBI on Tuesday, Nifty future has already abandoned it's tentative move to test the higher resistances and returned to the more familiar level of 5880 where the 100 DMA is situated now. The important question now is whether the contract will test the lower support of 5500 and 50 DMA at 5520. As the 5500 strike is having huge Put option open interest, the level may act as a major reference point for today and tomorrow. Though unlikely, in case the 5500 level is broken before the expiry, it may lead to a mad scramble to secure the open positions by the put writers. They could cover / hedge their positions either by buying the open puts at a loss or by selling Nifty futures. As the time before expiry is short, some of them may hedge short puts by selling Nifty futures and this may lead to a sharp fall to the next strike at 5400. Apart from this, there is no change to the technical position of the market.  

   Nifty Futures - Daily Chart