Indian markets appear to have made a temporary bottom near the 22,000 level, with the zone eliciting strong buying interest from domestic investors and goading options sellers into writing puts at that strike.
Analysts expect a bounce toward the 23,000–23,200 band following Thursday’s sharp intraday recovery. They caution, however, that any escalation over the weekend could upset their forecasts.
"Thursday's smart recovery and close above the previous session low sets a bounce in motion toward the first resistance level of 23000 -23200, so long as the war doesn't escalate in the intervening period ," said Sahaj Agrawal , senior vice president research at Kotak Securities .
Friday is a market holiday for Good Friday.
12% war slide
Since the war began on 28 February (Saturday), the market has fallen almost 12% from 25,178.65, a day earlier, to Thursday’s low of 22,182.55. Over the same period, crude rose 50% to $109.24 a barrel due to supply constraints from the Strait of Hormuz.
Despite the slide, the market has repeatedly found support around 22,000:
- On 23 March, Nifty bounced from 22,471.25 to close at 22,912.4 the next day.
- After falling to 22,283.85 on 30 March, it rebounded to 22,941.3 on 1 April.
The latest test came Thursday when the index slipped to an intraday low of 22,182.55 but closed at 22,713.1 — up 0.15% from the previous session and a sharp 2.4% from the day’s low — after Iran said ships from non-hostile countries could pass through Hormuz after paying a toll of $2 million per vessel to it.
"The smart recovery on Thursday indicates we could bounce to 23,000-23,200 in the very short term so long as a a steep escalation doesn't upend our projections," said Rajesh Palviya , senior vice president (research ), Axis Securities.
Asked whether investors had seen the worst from the war, Palviya said he couldn't "vouchsafe" for that unless the market breaks the 23,400-23,500 level decisively.
"We can safely say this (22,000) is a temporary bottom for now ," he added.
The level of 23,512 is the 61.8% retracement from the 52 week low of 21,743.65 on 7 April last year to the record high of 26,373.2 on 5 January.
A convincing breach of 23,512 could extend the bounce in the market, said Kruti Shah, quant analyst at Equirus Securities.
FPI selling wave
Fears of escalation are reflected in heavy foreign selling. Foreign portfolio investors sold a provisional ₹30,321 crore in cash over just two sessions this month through Thursday, after offloading ₹1.22 trillion in the secondary market in March — the highest record outflow seen in any month, per exchange and depository data.
Despite Thursday's intraday recovery, FPIs net sold index futures (Nifty and Bank Nifty) worth ₹465 crore as a hedge against falling markets in week ahead.
The latest round of selling took their net index futures sell positions to 268,020 contracts, per NSE data. The record high net sell was 279,467 on 27 March.
"Such huge hedging indicates that uncertainty remains high," said SK Joshi, consultant at Khambatta Securities .
Option sellers as of Friday are playing for a 20,841- 23,500 range based on options' closing prices for the current month.
Domestic institutional investors absorbed the FPI selling at lower levels, buying shares worth ₹1.43 trillion in March — a record inflow for any month — and ₹14,380 crore so far this month, per BSE data.