By Ruchit Jain
The volatility in our markets finally seems to have cooled-off in last few sessions after the large swings seen around the Budget session. The India VIX has declined to around 13 again indicating much of the negative news has now been factored in. The correction in the Adani group stocks dampened the market sentiment which had reached the extreme end caused by excessive pessimism. Such sentiments usually lead to bottom in the corrective phase and the markets seem to have formed such bottom on the budget day.
The global markets have been doing well and the Dollar Index still seems to be in a downtrend which are positive factors for the equities. However, the major worrying factor has been the FIIs selling as they have been selling in the cash segment and have formed short positions in the index futures segment as well. Their ‘Long Short’ Ratio is now around 19 percent which is again near to the levels which we saw during the bottom in June 2022. Their position seems to be short heavy and if they start covering their short positions from here, that would be a big positive factor for the near term.
On the other hand, the Client section which includes the retail traders and the HNIs have been trading with a positive bias with over 60 percent positions on the long side. In the options segment, the weekly series has decent open interest build up at 18000 call indicating it to be the immediate hurdle. On the put side, the open interest data is scattered with support range placed at 17800-17700 range.
Technically, Nifty is trading in a channel and the higher end of the channel is seen around 18000 wherein even the open interest build up in call options is seen. Once this hurdle is taken out, we could see short covering which could then lead the index towards 18200-18250 in the near term. On the flipside, the immediate support for Nifty is placed in the range of 17800-17700 followed by 200 EMA support around 17550. Traders are advised to look for buying opportunities on intraday dips and trade with a positive bias.
(Ruchit Jain is the Lead – Research at 5paisa.com. The views expressed are the author’s own. Please consult your financial advisor before investing.)