Nifty Uptrend Likely to Continue, Resistance Around 8,700: Nirmal Bang

After a muted July series, Nifty has had a good August series. The benchmark index has gained 2.4 per cent so far since the expiry of the July series.
 

Nirmal Bang Securities in a note today said the uptrend in Nifty is likely to continue, with next big resistance level seen around 8,700-8,800 levels.
 

The brokerage said Nifty futures have added long positions since expiry of the July derivative series. Open interest (outstanding positions) in Nifty has increased 3 per cent in the August series till Friday, it said. If open interest in a particular stock or index goes up along with increase in its price, then it typically indicates a built-up of bullish bets or long position (buy position).
 

Nirmal Bang also cited higher long positions from foreign institutional investors (FIIs) and lower net short positions from high net worth individuals (HNI) for its positive view on Nifty.
 

However, Nirmal Bang notes that Nifty is likely to face resistance at around 8,700-8,800 level as open interest in 8,700 and 8,800 strike call positions was the highest. The 8,700 strike call option on Nifty had an open interest of 38.9 lakh shares, while the 8,800 strike call option had open interest in 52.4 lakh shares.
 

Similarly 8,400 will act as an immediate support for Nifty in the down side, the brokerage said. "The put of strike 8,200 has the highest open interest build up but the level of 8,400 is expected to provide immediate support to Nifty on the downside as the 8400 put has significant optionality," Nirmal Bang said.
 

As of 1.45 p.m. Nifty traded 0.33 per cent higher at 8,592, while the August Nifty futures were up 0.22 per cent at 8,613.