Indicators suggest Nifty likely to post fifth consecutive weekly gains next week

The volatility cooling off since the start of the March expiry series has aided the bulls. The India VIX, known as the fear gauge, took multiple resistance around the 16.5 levels on the daily chart since December 28, 2024. Since making a high of 16.74 on same day, the India VIX has been moving down, closing at 13.61 at the close of the week.

FPIs activity picking up a Good sign for Market

The foreign portfolio investors (FPIs) who are holding more short positions relative to long positions have been making a steady comeback in Index futures. The Long-Short ratio has risen from 37.99 percent on March 4 to 41.86 percent on March 7. The FPIs were seen liquidating their existing short positions and simultaneously building long positions in Index futures. Though they still hold more short positions, their activity which remained subdued, seems to have picked up pace which is a positive sign for the markets.

OI indicates Build up of fresh longs in Index Futures

The Open Interest (OI) has risen nearly 9 percent from 1.41 crore shares at the end of last week to 1.54 crore shares at the end of the current week. The price during the same period has risen by half a percent, from 22,378 to 22,494, indicating build up of fresh long positions in Index futures.

PCR flat but Bulls have an upper hand

The trend for Put-Call ratio (PCR) largely remained flat during the week with the PCR moving from 1.32 on March 2 to 1.35 on March 7. The Put writers (Bulls) have made a comeback in the March series after being dominated by the Call writers (Bears) for the whole of February series. Once the Put writers pick up pace, Nifty is likely to move even higher.

For the coming week expiry, the maximum open interest on the Call side (resistance) is placed at 22,500 strike while the maximum Put open interest (support) is placed at 22,400 strike.

Nifty has been moving in a higher high higher low formation, indicating uptrend since February 13, 2024. Despite the minor corrections in between, the previous swing lows of 21,137 made on January 24, 21,544 made on February 13 and 21,861 made on February 29 have remained intact.

Both the Call & Put writers have sizeable positions at the 22,500 strike with the bears leading the bulls by a thin margin. The option activity at the 22,500 strike will set the tone for future movement in Nifty in the coming week.

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