Experts indicated that the market would likely continue to be choppy in the upcoming sessions after exhibiting weakness at the top and moving into volatility. Support is located at roughly 22,200–22,100 levels. They said that in the event of strength, the Nifty 50 would encounter resistance near 22,500 on the upper side.
The Nifty 50 gained three points to 22,336 on March 12, and the BSE Sensex increased by 165 points to 73,668. On the daily charts, the closing was close to starting levels, forming a Doji candlestick pattern.
“Normally, such Doji pattern after a reasonable upside or downside movement calls for an impending trend reversal. But having formed this pattern after one session of weakness doesn’t imply any significant prediction of the pattern,” stated Nagaraj Shetti, senior technical research analyst at HDFC Securities.
Technical analyst Rajesh Bhosale of Angel One encouraged traders to keep an eye on key resistance levels, especially the strong initial barrier between 22,500 and 22,550, which corresponds to the upper bound of the Rising Wedge formation.
Apparently, “despite the absence of significant selling pressure, prices are approaching key support levels, notably the 20-day EMA (exponential moving average) near 22,200, followed by crucial support at 22,000, marking the lower end of the Rising Wedge and a potential bearish reversal trigger point,” he said.
Since the breadth was strongly in favor of losses, the broader markets underperformed frontline indices. The Nifty Smallcap 100 and Midcap 100 indexes experienced declines of 2% and 1.4%, respectively.
Bank Nifty
The Bank Nifty saw some volatility on March 12 and ended the day somewhat lower, but it was able to maintain the 20-day MA’s (days moving average) support at 46,800. On the daily charts, the index dropped 45 points to 47,282 and created a high wave-like candlestick pattern. The intraday high was 47,812, and the low was 46,884.
“A strong resistance is observed at the 47,800 level, and a breakout above this point would pave the way for all-time high levels. The index maintains a “buy on dip” stance as long as the mentioned support levels are held,” Kunal Shah, senior technical & derivative analyst at LKP Securities stated.
Call options status
Based on weekly options data, the 22,500 strike had the highest Call open interest with 81.79 lakh contracts. This could serve as a crucial short-term resistance level for the Nifty.
The 22,800 strike added 22.56 lakh contracts; the 22,900 strike added 16.82 lakh contracts; and the 22,700 strike added 8.69 lakh contracts. These strikes all demonstrated meaningful call writing.
At the 23,000 strike, which shed 11.42 lakh contracts, the highest Call unwinding occurred. This was followed by the 23,200 and 23,300 strikes, which shed 8.4 lakh and 4.13 lakh contracts, respectively.
Put option status
With 49.86 lakh contracts, the put side’s largest open interest was observed at the 22,000 strike, which can serve as a crucial Nifty support level. The 22,300 strike, which included 39.81 lakh contracts, and the 21,800 strike, which included 39.51 lakh contracts, came next.
Significant Put writing occurred at the 22,000 strike, adding 17.5 lakh contracts, and then at the 21,700 and 22,300 strikes, adding 7.19 lakh and 7.15 lakh contracts, respectively.
Improved delivery performance
A high delivery rate is indicative of interest in the stock among investors. Among the F&O equities, Metropolis Healthcare, Jubilant Foodworks, Marico, Bharti Airtel, and Dalmia Bharat experienced the highest delivery.
Stocks to witness a massive build-up
Thirteen stocks, including Oracle Financial Services Software, IndiaMART InterMESH, TCS, Metropolis Healthcare, and Indus Towers, had a protracted build-up. A build-up of long holdings is indicated by an increase in both price and open interest (OI).
Stocks to witness long unwinding
The OI % indicated that 70 stocks experienced long unwinding. BPCL, Aditya Birla Fashion & Retail, Ipca Laboratories, Hindustan Copper, and Tata Chemicals are a some of these. Price and OI declines suggest long unwinding.
Stocks to witness a short build-up
Seventy stocks, namely National Aluminium Company, Piramal Enterprises, BHEL, Dr Lal PathLabs, and Granules India, had a brief increase in value. A rise in OI and a decline in price indicate the accumulation of short bets.
Stocks to witness a short covering
Thirty-two equities were on the short-covering list based on the OI %. These companies are Indraprastha Gas, HDFC Bank, ICICI Lombard General Insurance Company, Aditya Birla Capital, and Mahanagar Gas. Short-covering is indicated by a decline in OI and an increase in price.
Nifty Put Call ratio
The Nifty Put Call ratio (PCR), a gauge of the state of the equity market, increased from 0.94 to 0.95 on March 12th. When the trading volume of Call options exceeds that of Put options, as shown by a PCR of less than 1, it often portends a bullish trend in the market.
Massive deals
FII and DII status
On March 12, provisional data from the NSE revealed that domestic institutional investors (DIIs) bought stocks worth Rs 2,358.18 crore, while foreign institutional investors (FIIs) net bought shares worth Rs 73.12 crore.
Stock restricted as per F&O ban on NSE
The NSE has maintained Aditya Birla Fashion & Retail, Hindustan Copper, Manappuram Finance, Mahanagar Gas, SAIL, Tata Chemicals, and Zee Entertainment Enterprises on the F&O ban list for March 13, but has added National Aluminium Company and Piramal Enterprises.
Disclaimer: The opinions and financial advice (extracted from Moneycontrol) shared here are meant to be informative. It is advised to consult with qualified specialists before making any financial decisions.
