The March series also shows that open-in tests have declined by 20.2%, and price increases by 4.6% after expiration, indicating that short positions are covered. Nifty’s rollover was 76.1%, lower than the previous month’s rollover and quarterly average of 80.1%, suggesting a decline in long-term position momentum.
These dynamics led to analyst Riyank Arora, derivatives analyst at Mehta Equities, to talk with ET Market regarding the outlook for Nifty and Bank Nifty, along with the April series of indexing strategies. Below is an edited excerpt from his chat:
The market is trying to show resilience despite global headwinds, and is recovering sharply from previous losses. This is what I saw since the beginning of this year. What is your interpretation of this reversal and what does it tell us about the underlying emotions?
The clever people feel the reversal shows a bit of bullishness in the market as they bounce off on a five-period EMA and a critical 100-day moving average. Currently, immediate support is around 23,400 and immediate resistance is around 23,850 levels. The underlying emotions now appear to be shifting from selling when it comes to rising.
On Thursday we saw something nifty bounce off the 100 hoax and form green candles. Technically, how important is this level and could this be another set up of rally’s leg?
Technically, the level of 23,400 is an important support mark for traders to monitor the feet of another rally. Holding better than this is expected to increase momentum rally to odd levels of 23,800 and 24,000. However, a break below this can cause minor pain towards the 23,300 and 23,100 marks.
What are you reading about India VIX now? And does this signify the comfort and self-satisfaction of the market amidst the uncertainty of the world?
With the Indian VIX somewhere around 12.7, I feel the volatility is declining and it’s coming back from a low level of stability. However, in the future, if there is tariff-related news or global uncertainty, it could surge into the volatility index. But yes, for the time being, we are trading on a stable memo.
Trump’s announcement of 25% automobile import tariffs created a global ripple effect. How serious is this threat to Indian stocks, particularly trade-sensitive sectors such as automobiles and pharmaceuticals?
The impact of the 25% automobile import tariff was expected to be negative, especially in trade-sensitive sectors such as Auto and Pharma. However, I technically feel that the indexes in both sectors are traded with a key support mark. For the NIFTY Auto Index, the critical support will be at the 21,200 mark, and for the Nifty Pharma Index, it will be placed around the 21,000 mark. If these levels break, you can see the index sales pressure, but a strong hold on top of these indicates risk rewards in favor of the bull.
The influx of powerful foreign funds is driving optimism. Do you think the FII is coming back with confidence, or is this a tactical play ahead of the revenue season?
I feel that this inflow actually shows some optimism, as the data for the FII in the cash segment is Rs 2,000 on the net buyer’s side. Returns inform good purchases from low levels with conviction and we feel they are optimistic across India. As I said technically, I feel that 23,000 is a great support. If that goes well, we are organising the meetings to the level of 24,000 or higher.
What is the role of domestic investors (DIIS and retail) in supporting the market through the recent uncertain stages? Will they intervene when the FII is pulled back?
I feel that when FII returns, domestic investors will also turn on the positive side. You know, we witnessed full sales pressure in midcaps and small caps. From a lower level, FII is trying to support the market, with emotions changing and domestic investors looking forward to enjoying the rally as well.
The energy and real estate sector is outperforming, but automobiles and pharmaceuticals are behind. Do you see a clear sector turnover during play, or is this a more reaction to global development?
Auto and Pharma are behind as 25% of auto import tariff news comes in and the two sectors are the most sensitive. Most of the sector’s indexes appear to be supported around the exponential moving averages of periods 5, 9 and 21. Energy and real outperformance compared to the sluggishness of automobiles and pharmaceuticals are felt as indications of news-related movements due to the announcement of tariffs and response to global development.
Tata Motors put pressure on JLR due to its exposure to the US market. Do you think the stock revision is justified? How should long-term investors see it now?
Technically, we feel that the stock has immediate support with Rs 660 mark and immediate resistance at Rs 690 levels. As stock trading is below the significant moving average, we feel that there may be a side-to-side consolidation in stock prices. Rs 660-690 is within that range, and Rs 700 is a big hurdle at the top. Investors should look at Tata Motors from a long-term investment perspective and focus on buying all the dips from now on.
BSE has surged into NSE’s plans to postpone the expiration date from Monday. Do you think this will continue to support inventory momentum, or is it already priced?
We feel that the BSE’s robust momentum indicates the overall strength of the inventory, and we hope that as this rally raises further, odd targets will come in at 5900-6000. Bullets can continue as stocks are well above its important moving average and as volumes are witnessing a rapid surge in volume, ultimately heading towards a new history high.
Where do you notice the accumulation of important OIs in stock? What does F&O data tell us about where traders are placing them?
Traders focus on stocks such as ONGC, NHPC, SAIL, NYKAA, and UNION BANK as these stocks witnessed an increase in open profits as prices rose. However, on the IDFC first, on the short seller side, Zomato and IOC show negative momentum in stock prices according to OI data analysis.
The expiration date was visible early on. How did the derivatives market handle expiration dates and what clues can you get with the positioning of the April series?
As we predicted and moved on to April, I think Expiry went right in a lateral integration range between 23,400 and 23,650. With volatility absorbed and Indian VIX trading low, we should be able to see a positive move to surpass the important moving average. Two support to note are 23,400 and 23,000 at key levels and 23,800 and 24,000 at top levels. Trends must remain positive.
What are your broader F&O strategies for the future? We are seeing long rollovers in major sectors. Are there sectors that have a prominent short accumulation?
In the Section, we feel that good rollovers are being seen in sectors such as FMCG, consumer durability and energy index. So we should ideally be on the negative side of it in the month I feel in April.
For Nifty and Bank Nifty, what are the important resistance and support levels to watch in the short term? Also, what is your preferred trading strategy?
For NIFTY, we feel that 23,400 is an important level. Since then, we feel that 23,200 and 23,000 are two other major support markets. On the high side, 23,800 and 24,000 are considered the main resistance levels. Similarly, with Bank Nifty, I feel that 51,000 is immediate support and 52,000 is immediate resistance. The main support is located at 50,000 and I feel that the preferred trading strategy at the current level is to focus on purchasing dips from here. A 100-200-point decline in NIFTY and 400-500 points reduction in NIFTY and 400-500 points is a good time to last long in the future in April.
Midcaps and Smallcaps once again showed strength. Do you think the broader market is regaining leadership, or should we still be aware given the risks of valuation and liquidity?
When you buy returns on most stocks, we feel that the Midcap and Smallcap indexes are trading above their significant moving average and show good strength. With indexes trading above the exponential moving averages for periods of 5,9 and 21, showing bullishness, we may see a good reverse move from current levels. Technically, the broader market is regaining leadership and I feel that purchasing should resume from here and the two indicators need to be higher along with overall market trends and direction.
(Disclaimer: recommendations, suggestions, opinions and opinions given by experts are unique. These do not represent views of the economic era.)
