Nifty weekly expiry in focus; Analysts decode charts, derivatives positions

Based on the options data, on Tuesday the focus will be on the 22,250-22,500 range owing to Nifty's weekly expiry, says Dharmesh Bhatt, Head-Derivatives Research at Systematix Institutional.

Disclaimer: Views and outlook in this report belong to the brokerages and analysts cited. They do not reflect the views of Business Standard. Readers are advised to exercise discretion. The NSE Nifty 50 index plunged almost 350 points or 1.5 per cent in Monday's intraday deals, before settling with a loss of 0.7 per cent or 157 points at 22,363. In doing so, analysts suggest the Nifty may have lost the momentum it regained on Friday. This morning, GIFT Nifty indicated a likely quiet start to the trading action as high crude oil prices continue to weigh on market sentiment. That apart, the weekly Nifty options expiry could sway the market mood either way. Dharmesh Bhatt, Head-Derivatives Research at Systematix Institutional Research says that the Nifty's recovery has lost momentum, with the index giving back ground after Friday's sharp rally and returning to the support zone. The analyst flags that the base-building thesis remains intact only while 21,900 holds, but rising volatility and renewed deterioration in derivatives positioning keep the broader trend bearish. Bhatt adds that the volume was the lowest in three weeks, indicating limited participation and a lack of conviction behind the move. From the weekly options expiry perspective Bhatt says the focus will be on the 22,250–22,500 range, with 22,371 as the first downside test and 22,300 and 22,000 as put-support levels. CHECK Stock Market LIVE Updates  "The 22,500 strike remains a heavy positioning zone on both sides. With spot below the flip, sharp moves remain possible," the analyst explains. Meanwhile, Om Mehra, Technical Research Analyst at SAMCO Securities notes that fresh Call writing was concentrated between the 22,400 and 22,600 strikes, with the heaviest addition at 22,600, creating a strong overhead resistance zone. On the Put side, meaningful unwinding was seen at 22,500, suggesting that some nearby support was withdrawn. The Put Call Ratio (PCR) stands at 0.67, reflecting clear Call side dominance, says Mehra. Hariselvan Radhakrishnan, Founder & CEO of HST Wealth reckons that the Nifty on Tuesday must defend the 22,300–22,200 zone and reclaim 22,500–22,600 for the mildly positive opening to become a meaningful rebound. "Failure to sustain the opening strength could bring 22,200 and eventually 22,000 back into focus," cautions Radhakrishnan. Ponmudi R, CEO of Enrich Money flags that the Nifty is trading below its key moving averages, indicating that the broader technical structure remains weak and selling pressure continues to dominate. The analyst sees 22,400–22,500 as the immediate resistance zone, and as the crucial hurdle that the Nifty needs to break decisively. On the downside, Ponmudi sees near support at 22,300, followed by the crucial 22,180–22,200 zone. As a broader market trend perspective, Nandish Shah, Deputy Vice President at HDFC Securities says that the short-term trend remains bearish, with the Nifty trading below its 11- and 20-day Exponential Moving Averages (EMAs). Shah believes that a sustained move above last week's high of 22,776 would be needed to signal a bullish trend reversal. "On the downside, 22,180 is the near-term support; a break below this level could signal a resumption of the downtrend," Shah adds.