Nifty bias improves; analysts expect further gains above 23,200

In the derivatives segment, Crompton Greaves, Titan and HDFC Bank saw over 90 per cent rollovers on Wednesday. The Nifty Put-Call-Ratio rose above 1, with FIIs cutting down some of their short bets.

The NSE Nifty 50 index registered back-to-back gains in the last two trading sessions ahead of the monthly futures & options expiry today, and the Union Budget on Saturday. Analysts attribute the pullback in the market to oversold conditions in the market and some covering of short positions by the FIIs.  Over the last four months, the Nifty 50 index had tumbled nearly 12 per cent, with 16 of its constituents falling more than 20 per cent. Technically, the Nifty has been trading below its short-term, the 20-DMA (Daily Moving Average) since the start of the year. However, analysts believe that yesterday's gain on the Nifty offers hope for further recovery.  Technically, Nifty formed a green candle on the daily chart, suggesting strength, with immediate resistance near 23,360, where the 21-day Simple Moving Average (SMA) is placed. As long as the Nifty holds above 22,780, a short-term pullback toward 23,360 and 23,500 is possible, favouring a buy-on-dips strategy, said Hrishikesh Yedve, AVP Technical and Derivatives Research at Asit C. Mehta Investment Interrmediates.  That apart, Prashanth Tapse, Senior VP (Research) at Mehta Equities highlights that the US Fed decision to leave rates unchanged, may keep the market sentiment subdued.  "The Federal Reserve kept interest rates steady at 4.25 per cent -4.5 per cent, maintaining a cautious 'wait-and-see' approach, leaving market sentiments subdued. The attention now shifts to the Union Budget 2025, where Finance Minister Nirmala Sitharaman is expected to announce measures to boost consumption and support growth while adhering to fiscal discipline", said Prashanth.  Meanwhile, foreign institutional investors (FIIs) have reduced some of the short positions in index futures. The FIIs long-short ratio now stands at 0.33 as against 0.19 in mid-January. This ratio, however, still implies that FIIs hold 3 short positions in index futures for every long trade.  Nifty options data hint at optimism  The Nifty derivatives data underscores a bullish undertone, with put writers holding a stronger position than call writers, said Dhupesh Dhameja, Derivatives Analyst at SAMCO Securities.  The analyst in a note explains that the open interest at the 24,000-call strike has surged to 1.27 crore contracts, cementing it as a significant resistance level. Conversely, the 23,000-put strike has accumulated a notable 1.24 crore contracts, highlighting it as a formidable support zone.    Substantial put additions between 22,700 and 23,100 reinforce a strong base, while the unwinding of call positions at higher strikes indicates a growing bullish bias.  The Put-Call Ratio (PCR) advanced to 1.02 from 0.88, signifying improving sentiment among market participants.  Traders may adopt a 'Buy-on-Dips' approach, capitalizing on lower support levels. Furthermore, the 'max pain' point at 23,200 suggests limited downside potential in the short term. A breakout past 23,200 could pave the way for a stronger recovery.  Stocks Rollovers to February series  According to data from Spider Software, at the end of trading on Wednesday, Crompton Greaves, Titan and HDFC Bank had seen the maximum rollovers, at above 90 per cent. The current open interest (OI) as a per centage of the market-wide limit stands at 27.2 per cent, 18 per cent and 16.6 per cent.    Out of the total 223 stocks, another 26 contracts had seen over 85 per cent rollovers to the February series. Prominent among these were - Tata Consumer Products, Manappuram Finance, SBI Life, JSW Steel, Adani Green, L&T Finance, HCL Technologies, Shriram Finance, Tata Elxsi, TCS, BPCL, Cipla and Lodha.