Nifty Weekly Expiry: Analysts Decode Charts and Derivatives Positions

Nifty Weekly Expiry: Analysts Assess Market Dynamics Amidst Volatility

As Nifty approaches its weekly expiry, analysts are closely monitoring key levels and derivatives positions that could shape market sentiment.

Market Sentiment and Technical Indicators

The Nifty’s recent performance has raised concerns among analysts, particularly as high crude oil prices continue to exert downward pressure on market sentiment. Dharmesh Bhatt, Head of Derivatives Research at Systematix Institutional, notes that the index’s recovery has lost momentum, with the market returning to a critical support zone. He emphasizes that the base-building thesis remains intact only if the index holds above 21,900, but warns that rising volatility and deteriorating derivatives positioning suggest a bearish broader trend.

Key Levels to Watch

As the Nifty approaches its weekly expiry, analysts are focusing on the 22,250-22,500 range. Bhatt identifies 22,371 as the first downside test, with 22,300 and 22,000 serving as put-support levels. The 22,500 strike is noted as a significant positioning zone, indicating potential for sharp market movements. Om Mehra, Technical Research Analyst at SAMCO Securities, highlights fresh call writing concentrated between the 22,400 and 22,600 strikes, creating a robust overhead resistance zone.

Market Dynamics and Investor Sentiment

Investor sentiment appears cautious, with the Put Call Ratio (PCR) standing at 0.67, indicating a clear dominance of call positions. Hariselvan Radhakrishnan, CEO of HST Wealth, emphasizes the importance of defending the 22,300-22,200 zone for a potential rebound. Failure to maintain this level could lead to renewed focus on lower support levels, including 22,200 and 22,000. Ponmudi R, CEO of Enrich Money, echoes similar sentiments, noting that the Nifty is trading below key moving averages, which suggests a continuation of selling pressure.

Short-Term Outlook and Key Risks

From a broader market perspective, Nandish Shah, Deputy Vice President at HDFC Securities, indicates that the short-term trend remains bearish, with the Nifty trading below its 11- and 20-day Exponential Moving Averages (EMAs). He suggests that a sustained move above last week’s high of 22,776 would be necessary to signal a bullish trend reversal. Conversely, a break below the near-term support level of 22,180 could indicate a resumption of the downtrend.

Key Highlights

• The Nifty 50 index closed at 22,363, down 0.7% on Monday.
• Analysts are focusing on the 22,250-22,500 range ahead of the weekly expiry.
• Key support levels identified at 22,300 and 22,000, with resistance at 22,400-22,600.
• The Put Call Ratio (PCR) is at 0.67, indicating a dominance of call positions.
• A sustained move above 22,776 is needed for a bullish trend reversal.

Investor Note: As the Nifty approaches its weekly expiry, investors should closely monitor key support and resistance levels while remaining cautious of market volatility driven by external factors such as crude oil prices and derivatives positioning.