MUMBAI: Bulls could continue their aggression, which has seen key indices like the Nifty and the Bank Nifty rise 8.75% and 5.5% each from their closing lows on February 24 when the Ukraine war began.
Even the broader market, constituted by the Nifty Midcap 100 index , has risen 12.3% from its February 24 level, showing broad based participation.
The Nifty, which closed at 17670.45, on March 31, looks set to test the next hurdle of 17800 while Bank Nifty gears up to take on the 37500 resistance, having closed above its 200-day moving average of 36728 Friday to close at 37148.5.
“These two scenarios could pan out on Monday itself, unless matters in Ukraine get out of hand,” said Rajesh Palviya, technical head, Axis Securities who cites Brent oil’s retreat from a multi-year high of $139 on March 7 through $104 on March 31 as a big relief for India.
The biggest proof of the bulls getting back in control is the 42% plunge in fear gauge India Vix from 31.98 on February 24 through 18.43 on March 31. A reading above 20 signals nervousness while optimism is signalled by a reading below 20.
Some market watchers like Rohit Srivastava, founder , IndiaCharts, expect the present rally to extend to Nifty testing its record high of 18604.45 hit on October 19 last year. However, the more conservative analysts like SK Joshi, director Khambatta Securities, cite the upcoming RBI policy and quarterly results season, starting with IT major TCS as determining the trend.
“Let’s not forget that companies could take a hit on their margins, given the high level of inflation in the March quarter, exacerbated by the war,” Joshi added. Risks also remain in the form of a more severe strain of Covid surfacing, though for now, things seem to be under control, pointed out Joshi. FII flows will also be in focus as these constituents sold shares worth $18.5 billion in FY22, the most in any fiscal year since FY1999.
Higher rollovers of futures positions on Nifty at 82.12% in the March expiry compared to the three-month average of 76.92% and of 91.46% for Bank Nifty compared to the three month average of 81.76% indicate a positive start to the April Series of derivatives.