The Nifty failed to sustain itself above the strong resistance zone of 5,500-5,520 last week due to higher levels of profit-booking. The market is expected to re-test the 5,500 level as the SGX Nifty closed at 5,510 through the OTC facility of the Singapore Stock Exchange. The Dow Jones and S&P 500 and all the European markets closed on a bullish note on Friday, which hint at a strong opening for the Nifty and Sensex on Monday.

At 34.75 million, the open interest (OI) in the Nifty September futures indicates strong resistance above 5,500. The Nifty moved in a narrow range (5,470-5,490) after making an intraday high of 5,515 on Thursday, which suggests that participants are not willing to take positions at higher levels. The time-price opportunity (TPO) data for Friday indicates the index may face strong resistance above 5,497.

The September futures closed at a premium to spot and added over 2.61 million shares in OI on a week-on-week basis, indicating some long build-up at the lower level. On the weekly market picture chart, trading data hints at a bounce-back above 5,500, while volume-based support might come in at around 5,397. The point of control, the price level where the market spent the most time trading, suggests a price level of 5,600.

Even so, if the Nifty falls below 5,400, it has strong support around 5,350. The trading volume in Nifty options last week hinted at strong support at 5,400. The data indicates the 50-share index may not trade below 5,400 in the near future.

Traders bought the 5,500-strike put of the September series for some protection against downside, but sold the 5,300-5,400-strike puts. This points at strong support around 5,400. Participants also sold the 5,600-strike puts on expectation of a strong rally above 5,500. The change of hands was seen in the 5,500- and 5,600-strike call options, which indicates a strong resistance above 5,500.

The weekly trading pattern in key stock futures indicates a strong rally in Infosys Technologies, ICICI Bank and Bharti. Reliance Industries is expected to slip below Rs 900 with volume-based support expected to come in around Rs 897. Bharti Airtel is looking strong on a daily as well as weekly chart. The September futures of Bharti Airtel is expected to move above Rs 344, based on TPO projections for Friday. On the weekly chart, Bharti is expected to move above Rs 355.