US-Iran war news: Has Nifty 50 bottomed out? Stock market experts explain with the India VIX, Calls, Put Write details

US–Iran war: Extending Monday’s pullback rally, the Indian stock market's benchmark indices opened higher in Tuesday’s morning session. The Nifty 50 began at 23,493 and climbed to an intraday high of 23,566 within the first hour of trade. The BSE Sensex also opened strong at 75,826, rising to a high of 75,977 and posting an intraday gain of over 0.60%.

Following the outbreak of the US-Iran war, global equity markets, including Dalal Street, have been in a freefall. However, analysts believe this trigger is about to be priced in, as we saw during the Russia-Ukraine war in 2022.

Experts maintained that the India VIX has further reduced and is now close to 20, reflecting a reduction in risk perception.

According to them, investors need to take Calls and Put Writes in bulk at 22,000, indicating that the Nifty 50 index has strong support at 22,000, which is expected to remain sacrosanct.

Stock market today: What do Call, Put Write positions signal?

Expecting the Nifty 50 index to sustain above 22,000 levels even if the current pullback turns out to be a dead-cat bounce, Rakesh Bansal, Co-founder & Co-partner of Rakesh Bansal Ventures, said, “Investors have taken calls in bulk at 22,000, which signals the 50-stock index may not break this crucial support in the current fall."

Pointing towards the Put Write signal, Amit Goel, Chief Global Strategist at PACE 360, said, “Investors have taken a bulk Put Write position at 22,000 levels of the Nifty 50 index. This is expected to provide support to the 50-stock index around this Put Write level.”

Put writers are typically not retail investors. They are usually high-net-worth individuals (HNIs), institutional participants (DIIs and FIIs), and a segment of seasoned or sophisticated investors.

What does India VIX signal today?

Meanwhile, the volatility index also eased during the two sessions this week. India VIX index declined by over 4.50% on Monday and by over 6% during Tuesday's session. So far in March, India VIX has spiked by over 50%.

The India VIX is oscillating around 20 today, signalling a reduction in risk perception among market participants, said Sumeet Bagadia, Executive Director at Choice Broking.

Nifty 50 outlook for short term

After the end of Monday's session, Bagadia said that call writing was observed at the 23,500 strike, followed by the 23,700 strike. On the put side, notable writing was seen at the 23,200 and 23,000 strike levels.

“This means 23,000 is expected to remain a crucial support for the Nifty 50 index in the near term, and bulls' conviction can get strength once the key benchmark index breaks above 23,700 on a closing basis,” he added.

Has the Indian stock market discounted the US-Iran war?

With some signs of stability visible in the market, investors are wondering whether the market has started to discount the US-Iran war, which has caused one of the stock market crashes in recent history.

Goel of PACE 360 said, “Every trigger has a limit, and the US-Iran war is not an exception. We saw a spike in crude oil prices after the outbreak of the US-Iran war, but after more than two weeks, prices have been oscillating around $95/barrel over the last two sessions. As the market was correcting due to the rise in oil prices, which renewed the inflation fear, global equities are trying to come out of the bears' grip.”

He added that tensions around the Strait of Hormuz have eased as oil importers have found an alternative by placing fresh orders with Russia, Venezuela, and the US, depending on their geopolitical locations. Oil prices have spiked to above $100 amid disruptions at the Strait of Hormuz, which accounts for 20% of the world's crude oil passage.

“Oil crisis seems to be priced in and so does the equity market correction, and I am expecting the 22,500 to 22,000 to be a strong cushion for the Nifty 50 index, if yesterday's bounce back turns out to be a dead-cat bounce,” the PACE 360 expert added.

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