Nifty F&O Expiry: Why Tuesday Could Be a Volatile Day for Indian Markets
The Nifty 50 index opened in the green on Monday, marking a rare occurrence in recent times. However, the index failed to sustain its opening gains as selling pressure emerged on every intraday rise. As a result, the index closed near the previous day’s low, settling with a loss of 19.80 points, or 0.08%, at 24,634.90.
Key Takeaways from Monday’s Trading Session
Two key takeaways from Monday’s trading session are as follows: Firstly, there was a lack of conviction at higher levels, preventing any sustained move upward. Secondly, the pattern of lower highs and lower lows continued on the Nifty, despite the initial gap-up at the opening.
Daily Chart Analysis
On the daily chart, a bearish candle with an upper shadow formed, indicating that the bulls were unable to sustain the bounce back. This scenario was anticipated in previous analysis. Technically, the index is currently trading below its key moving averages—the 20, 50, and 100-day moving averages (DMA). The Nifty is trading about 2% above the 200-DMA, which has been flat for the past few months; a flat moving average clearly indicates a lack of clear directional momentum in the index.
Support and Resistance Levels
Looking ahead, the support zone between 24,340 and 24,440 becomes crucial for the index. A failure to hold this support could extend the correction towards the 200-DMA at 24,162, which coincides with the lower end of the channel support. Therefore, attention will be focused on whether the index can hold above the 24,340-24,440 support zone. On the upside, a sign of strength would emerge if the index manages to break the sequence of lower highs and lower lows, with 24,791 expected to act as immediate resistance, followed by 24,869.
Indicators and Oscillators
The 14-period daily RSI is currently below 40, nearing the prior swing low, while the MACD line is at the zero line, and the histogram shows a strong bearish momentum.
Heightened Volatility Expected on Tuesday
As we approach the final trading day of the month, the quarter, and the September F&O series on Tuesday, September 30, expect heightened volatility. This is because the F&O expiry can lead to increased trading activity, as investors and traders adjust their positions to minimize losses or maximize gains.
Investor Strategies
In such a scenario, it’s essential for investors to remain cautious and avoid taking any unnecessary risks. Instead, they can consider the following strategies: hedging, options trading, or position sizing to minimize potential losses.
Conclusion
In conclusion, the Nifty 50 index is expected to witness heightened volatility on Tuesday, the final trading day of the month, quarter, and September F&O series. Investors should remain cautious and consider the support and resistance levels, as well as the indicators and oscillators, to make informed trading decisions.