A Day of Exhaustion, Trap, and Tactical Put Buying

The Indian equity market opened on a surprisingly positive note today, with Nifty up by 46 points at the open, despite negative cues from global markets. The bearish sentiment globally stemmed from U.S. policy uncertainty, especially around potential tariff announcements, which had cast a shadow over Asian and European indices overnight.

Early Market Behaviour – Signs of Exhaustion

While Nifty opened higher, it lacked conviction. The first 5-minute candle showed exhaustion, marked by a green candle with negative delta, clearly indicating that buyers were being trapped – a classic delta divergence setup. This was further validated by the 9:20 AM candle, where COT (Commitment of Traders) turned positive, signaling aggressive selling activity into strength — a typical trap.

Entry Setup for Put Buyers

Given this context, a put-buying opportunity was on the radar, but confirmation was necessary. The key level to watch was the previous day’s Volume Profile POC at 25,640 (Nifty Futures). Price struggled at this level initially, but once POC was broken decisively, and also breached the selling imbalance zone of 30th June, a clear confirmation was established. A Put Buy on 25,500 strike was executed — with premiums starting around ₹40 and hitting a high of ₹80.

Midday – Follow-Through Selling and Confirmation

Around 1:15 PM, a strong bearish candle emerged with large negative delta and visible imbalance, indicating fresh short positions and intensifying selling pressure. Shortly after, the 1:30 PM candle showed a sudden spike in 25,500 Call OI, further confirming that the market participants were preparing for continued downside — market acceptance of the bearish trend had set in.

At this point, it became clear: the bears were in control.

Key Support and Pause Zone

The market found temporary support around 25,550, a zone previously marked by high volume and high delta on 26th June. As expected, the price paused and moved into consolidation, reflecting a phase of digestion. Around this time, VIX touched an intraday low near 12, showing that while premiums were low, intraday volatility remained active — a crucial insight for options traders. It’s worth noting that VIX impacts longer-dated options more than intraday moves, so its decline did little to suppress the real-time volatility.

Option Trade Performance and Strategy Insight

The 25,550 Put Buy, which had a low of ₹36.75, surged all the way to ₹142.70 — offering nearly 4x returns for nimble traders who timed their entry well. Such trades highlight the importance of waiting for confirmation via tools like delta divergence, POC breaks, and option OI shifts.

Outlook for 3rd July – Weekly Expiry Day

Tomorrow is the weekly expiry, and markets are likely to remain choppy, given today’s imbalance and the failure to establish a clear value area. Price action today shows a lack of consensus among participants, making range-bound volatility a high-probability scenario for expiry day.

We will need to track:

• Global market cues (especially the U.S. session)
• GIFT Nifty pre-open
• Overnight macroeconomic updates

If Nifty opens within a tight zone and remains below today’s POC for the first hour, expect range-bound, scalper-friendly volatility. Any unexpected global trigger could lead to intraday spikes, so positioning cautiously will be key.

Final Thoughts:
Today’s session was a textbook example of how reading market internals (delta, COT, OI shifts) can help decode trap setups and provide high-quality trade entries. Scalpers and tactical put buyers had a strong day, while long-only traders remained spectators. With expiry approaching, stay alert, trade light, and let price confirm your bias before entering.