F&O Manual: 18,700 likely to be tested in early hours on June 7

While the markets ended flat, buying was seen in rate-sensitive stocks like banking, auto and realty ahead of the RBI’s MPC meeting outcome later this week. With expectations rising that the central bank could once again take a pause on rate hike, hopes of steady interest rates going ahead triggered optimism in the rate-sensitives. Technically, the market is consistently holding a higher bottom formation. The Nifty closed up 5.15 points or 0.03 percent at 18,599. (Blue bars show volume and golden bars open interest (OI).)

On the daily chart, a clear range between 18450 and 18700 is visible. Currently, prices are leaning towards the higher end of this range, and considering the momentum seen towards the end of the session, it is likely that the upper range will be tested in the early hours of the coming session, said analysts. “The key question is whether the market has enough steam to break beyond this range. If so, we might witness a swift move towards all-time high levels in the next few sessions,” said Rajesh Bhosale, Technical Analyst at Angel One Ltd. (Bars reflect change in OI during the day. Red bars show call option OI and green bars show put option OI.)

The Bank Nifty exhibited high volatility while trading within a narrow range during the observed period. On the daily chart, it formed a doji candle, signalling market indecision. This suggests that the overall trend is expected to remain sideways, without a clear direction in the index's movement. “A support level is identified at 44,000, and if the index falls below this level, it might correct down towards 43,700. On the other hand, resistance levels are observed at 44,300 and 44,500, acting as barriers to further upward movement,” said Rupak De, Senior Technical Analyst at LKP Securities. (Bars reflect change in OI during the day. Red bars show call option OI and green bars show put option OI.)

JK Cement saw a long buildup with open interest rising 11 percent. A long build-up is a bullish sign that happens when open interest and volume increase with the rise in share price. Shree Cement, UltraTech Cement and ACC were others that saw heavy long buildup. (Bars reflect change in OI during the day. Red bars show call option OI and green put option OI.)

Mphasis was among those that saw a short buildup with open interest jumping 13 percent. The short build-up is a bearish sign that takes place when the price of a stock falls, along with high open interest and volume. (Bars reflect change in OI during the day. Red bars show call option OI and green put option OI.)