Expiry Day Volatility Seen as Nifty Remains Rangebound: Analysts
The Indian equity market has been experiencing a phenomenon of late – a tight range-bound movement. The Nifty 50 index, which tracks the performance of the top 50 companies listed on the National Stock Exchange (NSE), has been stuck in a narrow range of 24,500 to 25,200 for quite some time now. Despite a slight rebound on Wednesday, the broader technical picture remains unchanged, and analysts are expecting increased volatility on expiry day.
On Wednesday, the Nifty 50 index managed to snap a three-day losing streak, ending marginally higher. The 50-stock index closed at 24,931.45, up by 0.13% or 32.55 points from its previous close. The benchmark index has been consolidating in a tight range for the past few weeks, and the recent rebound did little to alter this picture.
The tight range-bound movement is a result of a lack of clear direction in the market. The index has been oscillating between the 24,500 and 25,200 levels, with no clear trend emerging. This lack of direction has led to a decrease in trading volumes, as investors await clear cues from global markets and domestic economic indicators.
Analysts are expecting increased volatility on expiry day, which is likely to be driven by positioning and hedging activities. Expiry day is a day when options contracts expire, and this can lead to increased trading activity and volatility. As the day approaches, investors are likely to take positions and hedge their bets, which can lead to increased price movements.
“The Nifty is likely to remain range-bound in the short term, but we can expect increased volatility on expiry day,” said Rajesh Jain, a technical analyst at a leading brokerage firm. “Investors should be cautious and watch for a breakout from the current range. A move above 25,200 could be a bullish sign, while a drop below 24,500 could be a bearish sign.”
Other analysts are also of the same opinion. “The Nifty has been consolidating in a tight range for quite some time now, and we can expect increased volatility on expiry day,” said Vinod Nair, a senior research analyst at a leading brokerage firm. “Investors should be prepared for a bumpy ride and watch for clear cues from global markets and domestic economic indicators.”
The Indian economy has been facing headwinds of late, including a decline in manufacturing activity and a slowdown in consumer spending. The Reserve Bank of India (RBI) has also been concerned about the economy’s growth prospects, and has taken steps to boost growth, including cutting interest rates and injecting liquidity into the system.
Despite these challenges, the Indian equity market has been showing signs of resilience. The Nifty 50 index has been able to hold its ground, and the broader market has been witnessing a decent recovery. However, analysts are advising investors to remain cautious and watch for clear cues from global markets and domestic economic indicators.
In conclusion, the Nifty 50 index is likely to remain range-bound in the short term, but analysts are expecting increased volatility on expiry day. Investors should be cautious and watch for a breakout from the current range. A move above 25,200 could be a bullish sign, while a drop below 24,500 could be a bearish sign.
