Markets week ahead: Nifty will look for direction ahead of F&O expiry

Market


Nifty ended almost flat with a minor cut on a week-to-week basis, followed by six straight weeks of gains. The market remained range-bound amid a lack of cues, and it will look for direction ahead of monthly F&O expiry. The good part is that the market is just breathing after a long run-up, and there is a good probability of an upside breakout. However, we are seeing profit-booking in the broader market.

Apart from F&O expiry, institutional flows will be important, which have dried up in the last couple of trading sessions. On the global front, the minutes of the US FOMC meeting will lead to some volatility in global markets. The movement of the dollar index, US bond yields, and crude oil prices will remain other critical factors to watch out for.

Technically, the Nifty is consolidating with a fulcrum at 18300. On an immediate basis, 18200 is a decent support level, whereas 18090–17950 is a critical support zone. On the upside, 18450 is an immediate hurdle; above this, we can expect a rally towards 18611/18888 levels.

Bank Nifty is outperforming where 43,000 is an immediate psychological hurdle; above this, we can expect a move toward the 44,000 level. On the downside, 42,000–41,650 is a strong demand zone.

According to the option statistics, 18,400 is an immediate hurdle with the highest open interest on the call side. As the put/call ratio is at 0.89, which is oversold territory, a decisive move above 18400 could result in a short-covering rally. On the other hand, 18300 is the immediate base with the most open interest on the put side, while 18,000 is a significant support. The long exposure of FIIs in index futures stands at 65%, which suggests their positive bias.

Pravesh Gour is Senior Technical Analyst at Swastika Investmart Ltd.

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