Nifty may head towards 17700-17800, traders advised to maintain positive bias

The eventful March series started on a cautious note amidst geopolitical tensions on Russia Ukraine war. Amidst nervousness in global markets, the index corrected towards the start of the series and almost tested the 15700 mark. The India Vix rose sharply in this period which led to higher volatility and uncertainty. However, we then witnessed a V-shaped recovery from the lows as markets were oversold and traders preferred to cover their shorts. As the markets sustained their gains, implied volatility cooled off and we also saw long formations in Nifty to lead the index higher and end the March series with gains of 7%. 

As the markets recovered from the lows of March 8, the Nifty initially witnessed short covering and later on fresh long formations were also noted. The rollover in Nifty stood at 82% while in BankNifty it stood around 92% which are higher than average. The rollover figures indicate that decent longs in both indices have been rolled to April series. If we look at FII’s data, they too have rolled their long positions in index futures, and their ‘Long Short Ratio’ at the start of April series is at 73.6 %. They also have decent long positions open in the stock futures segment at the start of new series.

Looking at the data, it seems that our market would continue with positive momentum at the start of the April series. For the coming week, the 17500 call option has decent open interest outstanding. The immediate support for the coming week is placed around 17300 -17200 while a move above 17500 could lead the index towards 17700-17800. Traders are advised to trade with a positive bias and look for buying opportunities on any declines. However, traders can look to lighten up longs in the range of 17700-17800 as it would be seen as a stiff hurdle for the market in coming week. A lot of stock-specific action was seen which is expected to continue in the near term and hence, traders should look to capitalize on the same. 

The outperforming sectors in the March series were Media (up 25%), Metals (up 21%), Realty (up 13%) and I.T. (up 12%). The Banking sector relatively underperformed the benchmark as it ended with gains of only 3%. On the flipside, the Nifty Auto Index was the only loser with a marginal decline.