The only sure thing in the stock market these days: Volatility

A glimmer of hope for the Indian market is that crude oil is not boiling in the midst of this geopolitical tension as there is an expectation that the Iran nuclear deal may soon end, which could lead to supply of Iranian crude in the future.

In the midst of such uncertainty, FIIs are continuing their sell-off mood while domestic institutional investors continue to support the market.

Derivatives data is of little help as FIIs are buying into index futures and stock futures where FIIs’ long exposure to index futures has increased to 60%. The put call ratio remains at 1.1, which is neutral for the market.

If we look at the Open Interest Distribution, it is scattered and does not give any clear direction whereas the FII position in the Index Option is also indicating a range-bound move.

Technically Nifty has completed its unfinished business of testing its 200-DMA. It took support at 200-DMA and then saw a smart pullback. However, the 17400-17600 area is an important resistance area as it is a grouping of the 20,50 and 100-DMA.

If Nifty manages to break out of the 17400-17600 supply zone then we can expect a rally towards 18000/18300 levels. On the downside, 17100 is an immediate and strong support level; Below this, Nifty can again come to the 16850-16800 support zone.

Bank Nifty is also trading volatile where 38000-38500 is acting as an immediate resistance zone; Above this, 39000-39500 is the next important resistance area. On the downside, the 50-DMA at 37250 is an immediate support level while the 200-DMA at 36500 is an important support level.

Santosh Meena is Head of Research at Swastika Investmart