Expiry Day Volatility Seen as Nifty Remains Rangebound: Analysts
The Indian stock market, as represented by the Nifty 50 index, has been stuck in a tight range for quite some time now. On Wednesday, the index managed to snap a three-day losing streak, ending marginally higher. Despite the rebound, the broader technical picture remains unchanged, with the index still trading within a narrow range of 24,500 to 25,200.
Analysts are now predicting volatility on expiry day, when the Nifty futures contracts are set to expire. They advise investors to be cautious and watch out for any significant breakouts from the current range.
“We expect volatility to increase on expiry day, especially as the Nifty is trading within a tight range,” said Nilesh Shah, head of equity at Kotak Mutual Fund. “Investors should be prepared for a breakout, either on the upside or downside, and position themselves accordingly.”
The Nifty 50 index has been trading in a range-bound manner for several weeks now, with the index struggling to break above the 25,200 level. The index has tested this level several times, but has failed to sustain its gains above it.
Despite the lack of direction, the index has managed to hold its ground, thanks to support from the 24,500 level. This level has acted as a strong support for the index, and has prevented it from falling further.
Analysts believe that the Nifty will continue to remain range-bound until there is a clear breakout from the current range. They expect the index to test the upper end of the range, but warn that a failure to break above this level could lead to a decline.
“Unless the Nifty breaks above 25,300, we expect it to remain range-bound,” said Sameer Kalra, head of research at Kotak Securities. “If it fails to break above this level, we could see a decline to 24,500.”
The outlook for the broader market is also uncertain, with analysts divided on the direction of the market. Some believe that the market will continue to remain range-bound, while others expect a breakout.
“We expect the market to continue its upward trend, driven by the strong earnings growth and improving economic conditions,” said Samir Sinha, head of research at India Infoline Securities. “However, we also expect volatility to increase, especially on expiry day.”
The Nifty 50 index is not the only index that is expected to see volatility on expiry day. The Sensex, which is also expected to see significant movement, could also see a breakout.
“Both the Nifty and Sensex are expected to see significant movement on expiry day,” said Nilesh Shah. “We expect the Sensex to test the 32,000 level, and a failure to break above this level could lead to a decline.”
In conclusion, the Nifty 50 index is expected to see volatility on expiry day, with analysts predicting a breakout from the current range. Investors are advised to be cautious and position themselves accordingly.
