F&O expiry tomorrow. Key Nifty, Bank Nifty levels to watch
- Stock market update: Bank Nifty is trading near an important psychological support level of 35000 while Nifty is trying to find its feet in the 16400-16200 zone
Indian markets had to face a double whammy situation today where geopolitical tension is a major headwind while a sharp surge in crude oil prices is a key risk for the Indian market because Brent crude has crossed the $110 mark. If we look at the headline indices then the market was looking very weak but there was some buying in the broader market from lower levels. Commodity stocks did well amid rising commodity prices whereas life insurance companies also witnessed strong buying from lower levels. As of now, news flows related to the Russia-Ukraine crisis and movement in crude oil prices are the key dominating factors for the volatility in the market.
Technically, market texture has become weak with sell on rise structure after Nifty slipped below its 200-DMA. However, Nifty is trying to find its feet in the 16400-16200 zone but the confidence of bulls will be back only above 17100 level while if Nifty slips below 16200 then 15900 will be the next important support level.
Bank Nifty is trading near an important psychological support level of 35000 and if it manages to hold this level then we can expect some short covering towards the 36350-36750 zone while if it slips below 35000 level then 34000 will be the next important support level.
We will have weekly option expiry tomorrow where derivative data is scattered and there is no confidence among put writers however the put-call ratio of 0.84 is a little oversold.
In Bank Nifty, 35000 put writers are still showing some confidence therefore we can expect a pullback from here.
We are in a structural bull market like 2003-2007 and there were 3 corrections of more than 30% in the last bull run. We are seeing the first meaningful correction in the market and long-term investors should not panic by this correction because it is just taking out weak hands before resuming its upmove. This correction will provide a good buying opportunity where major wealth can be created in the next 3-5 years. Therefore, The long term should stay invested and look for buying opportunities in this correction.
Short-term Traders should stay light amid lots of uncertainties where 16200 should be their trading stop loss for long positions.
Investors should focus on the domestic economy facing sectors like capital goods, infrastructure, real estate, banking, etc.
IT sector may continue to do well where ongoing correction is an opportunity to add some quality stocks. The auto sector is also providing favorable risk-reward opportunities after a period of underperformance. Our top picks in this correction are Thermax, KNR Construction, LT, SBI, ICICI Bank, Infosys, KPIT, Tata Power, Tata Motors, Minda Industries, SBI Life insurance, Bajaj Finserv, Canfin homes, Sobha, Brigade Enterprises, Kajaria Ceramics, and Reliance.
Santosh Meena, head of research at Swastika Investmart
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