March F&O expiry may provide direction to range-bound market this week

Indian equity markets are consolidating for the last five trading sessions following a smart rally from panic lows. This week, we will have March month F&O expiry that may provide a direction to this range-bound market. So far, the March expiry remains good for the market where Nifty and Sensex have gained more than 5 percent and generally expiry tends to expire in the direction of the prevailing trend.

Global equity markets are also rebounding and showing some signs of stabilization however there are still uncertainties about the Russia-Ukraine issue that may continue to cause volatility in global markets. Crude oil prices have again inched higher amid geopolitical issues and supply-side concerns and if it sees further strength then it could be a cause of concern for the Indian equity markets.

Technically, Nifty is consolidating between its 200-DMA and 100-DMA where 200-DMA is currently placed at 17,036 level while 100-DMA is placed at 17,340 level. If Nifty manages to sustain above its 100-DMA then we can expect a rally towards 17,490/17,640 levels while if Nifty slips below its 200-DMA then 16,800 is a sacrosanct support level.

Bank Nifty is underperforming because it has a critical supply zone of 36,7000-37,000 however 35,500-35,000 is a strong demand zone and we can expect a bounceback from here while if it slips below 35000 level then it may see selling pressure towards 34,500-34,000 zone. On the upside 36000-36200 is an immediate resistance zone while if it manages to take out 37000 level then we can expect a massive short-covering rally.

If we look at the derivative data then the Put-Call ratio is sitting at 0.94 level which is slightly oversold whereas FIIs' long exposure in the index future stands at 53 percent level which is neutral. OI distribution indicates a range of 17,000-17,500 and any decisive move from this range will dictate further direction.

(Santosh Meena is Head of Research, Swastika Investmart Ltd.)

Published on: Sunday, March 27, 2022, 11:28 AM IST