Indian equity markets bounce back after four weeks of continuous decline due to inflow of some positive news Russia-Ukraine Deadlock, BJP’s victory in four states, softening crude oil prices and selling fatigue. There are still uncertainties on the Russia-Ukraine issue, while we will have the outcome of an important FOMC meeting on 16 March amid hyperinflation.
Overall, crude oil prices and FII behavior will be the key triggers to propel the Indian market in a short week. On the domestic front, we will have our inflation data which will be announced on March 14.
If we talk about derivatives data then FII long exposure in index future is 43% which is still in negative territory while put-call ratio has improved to 1.03 level. If we look at the OI distribution chart, 17000 seems to be a significant hurdle.
technically, nifty A smart pullback was observed from the 16700 level and a bullish bullish candlestick formation was observed on the weekly chart which is a positive sign. However, 16800-17000 is an important supply area as it is a group of 20- and 200-DMA.
The Nifty needs to move above the 17000 level for the bulls to come back aggressively in the game. Otherwise there is a risk that the bears may reactivate where 16300-16250 would be an immediate and important support area then 16000-15500 would be the next support area.
Smart pullback was also seen in Bank Nifty. However, 35500/36000/36500 are important resistance levels and for any meaningful reversal it will need to cross the 36500 level. On the downside, 34000 is an immediate support level while 33000-32500 is the next support area.
Santosh Meena is Head of Research at Swastika Investmart Ltd.
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