Sensex, Nifty battle volatility ahead of F&O expiry session; 5 things to know before opening bell

Entering the monthly futures & options expiry session, SGX Nifty was trading flat with a positive bias, suggesting a tepid start to the day’s trade.

Global cues were largely positive during the early hours of Thursday. (Image: REUTERS)

Domestic equity markets have been see-sawing between bulls and bears for the last couple of days now. On Wednesday, S&P BSE Sensex closed 547 points or 0.94% lower at 56,819 while the broader NSE Nifty 50 ended 162 points or 0.94% lower at 17,038. The volatility index managed to soar 7% to higher to end the day above 20 levels. Now, entering the monthly futures & options expiry session, SGX Nifty was trading flat with a positive bias, suggesting a tepid start to the day’s trade. Global cues were largely positive during the early hours of Thursday.

Global watch: On Wall Street, S&P 500 gained 0.21% while Dow Jones was up 0.19%. The NASDAQ index closed flat. Among Asian markets, Shanghai Composite, Hang Seng, Nikkei 225, TOPIX, and KOSPI were up with gains while KOSDAQ traded with losses.

Technical take: Closing with losses, Nifty 50 formed a small negative candle on the daily chart with minor upper and lower shadow, said Nagaraj Shetti, Technical Research Analyst, HDFC Securities. “This pattern indicates indecision in the market participants at the lower levels. We observe a formation of a few such small candle patterns of bull and bear in the last few sessions within a narrow high low range. This indicates a lack of clear direction in the market,” he added.

Levels to watch out for: Nagaraj Shetti believes that Nifty is now preparing for a big move with the overall chart pattern weighing high on the downside. “The support of 16800 seems to be a crucial base of long positions. Immediate resistance is placed at 17150 levels,” he added. Meanwhile, Ruchit Jain, Lead Research, 5paisa.com said that until there’s a breakout from the range of 16825-17200, it is advisable to stay light and avoid aggressive positions.

FII and DII trades: Foreign Institutional Investors (FII) were net sellers once again on Wednesday, pulling out Rs 4,064 crore. Domestic Institutional Investors (DII) were net buyers again, pumping in Rs 1,917 crore. 

Call and Put OI: Maximum call OI for the expiry session is 17500 strike, followed by 17300. Put OI is the most at 17000. “For the expiry day, 17000 put option have the highest open interest outstanding indicating that option writers are not expecting expiry below this level. If the market sustains below this during the day, then there would be tug-of-war which could lead to higher intraday volatility,” said Ruchit Jain.

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