Market ends with a minor cut after a highly volatile week amid geopolitical uncertainties and volatility may continue this week as well because there is no clear picture about the Russia-Ukraine standoff and the market is reacting to every news flow which is coming every 15 minutes. Therefore geopolitical situation will remain a key factor for this week as well.
There is one silver lining for the Indian market is that crude Oil is not boiling amid this geopolitical tension because there is an expectation that the Iran nuclear deal may conclude soon which may lead to the supply of Iranian crude oil in the future.
FIIs are continuing their selling mood amid such uncertainty while domestic institutional investors are continuously supporting the market.
Derivative data is little supportive as FIIs are buying in index future and stock future where FIIs’ long exposure in index future has jumped to 60%. Put call ratio is sitting at 1.1 mark which is neutral for the market.
If we look at the open interest distribution then it is scattered and does not give any clear direction whereas FIIs’ positions in the index option are also indicating a range-bound move.
Technically, Nifty has completed its unfinished business of testing its 200-DMA. It took support at 200-DMA and then witnessed a smart pullback. However,17400-17600 area is a critical resistance zone because it is a cluster of 20,50 and 100-DMA.
If Nifty manages to take out the 17400-17600 supply zone then we can expect a rally towards 18000/18300 levels. On the downside, 17100 is an immediate and strong support level; below this, Nifty may again revisit the 16850-16800 support zone.
Bank Nifty is also trading volatile where 38000-38500 is acting as an immediate resistance zone; above this, 39000-39500 is the next important resistance area. On the downside, 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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