Indian markets witness more volatility - IIFL

After a choppy week, Indian markets could witness some more volatility and uncertainty as participants brace for the outcome of the much-hyped RBI's policy meeting. F&O expiry and corporate earnings will have a definite bearing on the sentiment.

Nifty has been moving in a tight band of 100 points. Whether the markets will get the much-needed spark would hinge on the outcome of the events mentioned above. We expect RBI to cut the repo rate by 25bps in the upcoming policy. Persistent moderation in headline inflation and government's displayed commitment towards containing fiscal deficit makes the case for the central bank to cut policy rate.

FII inflows have been encouraging so far, keep a watch on whether it persists or start to taper off. Although some of the results announced have been impressive, any disappointment from results could affect specific counters. The main indices are showing resilience but the undertone remains extremely cautious.

Technical View

Markets for the week remained more or less in same trading range of 6000-6100 but recovery on Fridays trading session helped Nifty to closed above the mid point of 6050 levels with RSI reversing from 55 levels.A formation of a 'hanging man' on weekly chart is a matter of concern but sell confirmation would happen only below 6000. Coming week trend for the market would be decided by policy action from RBI and mood from rest of global markets.

F&O View

Rollover in Nifty and Bank Nifty future stood at ~26% and ~20% (as per provisional data). The VWAP for Nifty is at 6030 and Bank nifty at 12740.Huge put writing was witnessed in Nifty Jan 6,000 strike which may act as a support in short term, while call unwinding was seen in Jan 6,100strike. We expect Nifty to trade in 6000-6160 range in short term. Auto, Power and Infra sector has seen higher rollover.

Source : Equity Bulls

Keywords