Another day of indecision is expected for the domestic stock markets. Analysts anticipate volatility in individual stocks while overall indices may remain range-bound.
The opening for Nifty is expected to be flat, with Gift Nifty indicating a level of 22,590 amid mixed global market cues. Despite this, analysts believe that there may be buying interest at lower levels. The decrease in the volatility index suggests a reduction in risk perception, providing some relief.
The recent liquidity enhancement measures implemented by the Reserve Bank of India are seen as a positive boost for the financial system, according to analysts.
Derivative trends continue to show a bearish inclination, with call writers dominating over put sellers. This signals a more defensive stance in the market. There is a significant open interest build-up at the 22,700-strike call, establishing it as a strong resistance level. On the other hand, a notable put accumulation at the 22,600 strike indicates solid support at lower levels.
Emkay Global Research notes that the market is experiencing a sharp correction driven by renewed FPI selling. Despite the negative sentiment, there are some positive aspects to consider. The reduction in risk weights for NBFCs and micro-borrowers by the RBI is seen as a significant positive, enabling increased lending in retail segments. Additionally, the market correction has led to more attractive valuations, with the Nifty trading below 22.5k. Emkay Global’s preferred sectors include Consumer Discretionary, Healthcare, and Telecom.
Technical and derivatives analyst Osho Krishnan from Angel One believes that bears are currently dominating the market, leading to a sustained bearish sentiment in the near term. The prevailing trend indicates caution for market participants due to ongoing uncertainties.
Overall, the sentiment in the market remains cautious, with traders avoiding aggressive bets. The decline in India VIX reflects reduced nervousness among participants, although it also indicates indecisiveness as the market struggles to find a clear direction.
