Expiry Day Volatility Seen as Nifty Remains Rangebound: Analysts
On Wednesday, the Nifty 50 index managed to snap a three-day losing streak, ending marginally higher. The rebound, however, did little to alter the broader technical picture as the index remains within a tight 24,500 to 25,200 range. Analysts expect volatility on expiry day and advise watching for a breakout.
The Nifty 50 index has been stuck in a narrow range for several days, with traders struggling to make a decisive move. Despite the slight uptick on Wednesday, the index has failed to break out of its recent range, leaving investors on edge.
Analysts are attributing the lack of movement to the impending expiry of derivatives contracts, which is expected to bring increased volatility to the market. “The Nifty is likely to be rangebound until the expiry of derivatives contracts on Friday,” said Deepak Jasani, head of retail research at HDFC Securities. “We expect volatility to pick up on expiry day, and traders should be cautious.”
Jasani’s assessment is echoed by other analysts, who are also expecting a rangebound market until the expiry of contracts. “The Nifty has been stuck in a tight range, and we don’t expect it to break out of it until the expiry of derivatives contracts,” said Anand James, chief market strategist at Geojit Financial Services. “Traders should be prepared for increased volatility on expiry day, and we advise watching for a breakout.”
The expiry of derivatives contracts is likely to bring increased volatility to the market, as traders rush to square their positions ahead of the deadline. This can lead to sharp price movements, making it a challenging time for investors to make decisions.
Despite the expected volatility, analysts are advising traders to be cautious and avoid making impulsive decisions. “Traders should avoid making impulsive decisions on expiry day, as the market can be highly volatile,” said Jasani. “Instead, they should focus on identifying trends and making informed decisions based on technical and fundamental analysis.”
In terms of specific stocks, analysts are advising traders to focus on those that are showing signs of strength and weakness. “We are advising traders to focus on stocks that are showing signs of strength, such as those in the IT and pharmaceutical sectors,” said James. “On the other hand, we are advising traders to avoid stocks that are showing signs of weakness, such as those in the financial and real estate sectors.”
Overall, analysts are advising traders to be cautious and prepared for increased volatility on expiry day. While the Nifty remains rangebound, traders should be watching for a breakout and be prepared to take advantage of it.
Conclusion
The Nifty 50 index has been stuck in a tight range for several days, and analysts are expecting volatility on expiry day. Despite the slight uptick on Wednesday, the index has failed to break out of its recent range, leaving investors on edge. Analysts are advising traders to be cautious and prepared for increased volatility on expiry day, and to focus on identifying trends and making informed decisions based on technical and fundamental analysis.
