Market shows mixed triggers
SGX is suggesting a better open. But these days the market has not been following through on these recently. But options detail seem to suggest that we may see a rally attempt today. The real question though is the size of the rally. As things stand, the max we may expect is about 17200. So far, 16800 (+/- 50) has still been functioning as a good support zone. Shorts exist and it will be mainly short covering that can drive the rally. Stock charts of leaders dont seem to be in a position to lead a buying rally.
The equity area is under tremnedous pressure and it is possible that loss adjustment selling may be part of the reason for the declines. Until April mid, we wont see any corporate triggers and hence this dullness may persist for some more time.
Over the past few days the FIIs have been aggressive in Options buying (over 25k crores). Historically, such large figures have resulted in some strong moves. It is a touchy time now and hence difficult to gauge the direction. The trend for 31st seems to be likely down day (using time cycles) and therefore, higher levels today may not sustain. IV has dropped so option premiums are also down. Hence shorting OTM options may not be worthwhile. When prices of underlying are weak-ish, option premiums go lower.
Tuesday’s are Fin Nifty expiry and this always (these days) to some concerted action in Bank stocks and this was visible yesterday too and can be said to be the reason for slight better performance of Bank Nifty. Check option writing in BN today for clues on direction as yesterday data reveals unwinding on both C&P.
Fresh declines in Adani group stocks may impact the sentiment overall. Market is not quite ready for a renewed decline in Adani stocks. Trends in these stocks are down and out and any rise is only a rally to exit longs.
Pharma stocks have been staging a mild rally for the past couple of sessions. If market dullness continues, then pharma majors will present us with some opportunities for creating longs for intra or multi day plays.