The only sure thing in the stock market these days: volatility
The market ends with a slight decline after a very volatile week amid geopolitical uncertainties and the volatility could also continue this week as there is no clear picture of the standoff between Russia and Ukraine and the market reacts to every news feed that arrives every 15 minutes. Therefore, the geopolitical situation will also remain a key factor for this week.
There is a silver lining for the Indian market is crude oil not bubbling amid this geopolitical tension as the Iran nuclear deal is expected to close soon which could lead to the supply of Iranian crude oil in the future.
FIIs continue their sell-off mood amid such uncertainty while domestic institutional investors continue to support the market.
Derivative data is unfavorable as FIIs buy index futures and equity futures, where FII’s long exposure to index futures jumped to 60%. The put call ratio stands at 1.1, which is neutral for the market.
If we look at the open interest distribution, it is scattered and gives no clear direction, while the FII positions in the index option also indicate range-bound movement.
Technically, Nifty has completed its unfinished business of testing its 200-DMA. It took support at 200-DMA and then experienced a smart pullback. However, the 17400-17600 area is a critical resistance area as it is a cluster of 20.50 and 100-DMA.
If Nifty manages to clear the 17400-17600 supply zone, we can expect a rally towards the 18000/18300 levels. On the downside, 17100 is an immediate and strong support level; below, Nifty may revisit the 16850-16800 support zone again.
Bank Nifty is also trading in a volatile fashion where 38000-38500 acts as an immediate resistance zone; above, 39000-39500 is the next significant resistance area. In contrast, 50-DMA of 37250 is an immediate support level, then 200-DMA of 36500 is a critical support level.
Santosh Meena is Head of Research at Swastika Investmart
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