Nifty may trade in 21,900-22,100 range on expiry day today; charts signal volatility

In the absence of significant catalysts, the Nifty benchmark index failed to maintain its all-time high levels and saw a strong sell-off in the last hour, resulting in a 1.11 percent cut and closing just above 21,950 in yesterday’s trading session.

Today, February 29, on the monthly expiry day, significant call writers’ positions have shifted to the 22,200 strike, and the upside potential appears limited, with any rebounds likely to encounter selling pressure. Immediate resistance is in 22,050-22,100 zone, while support levels to watch are last Thursday’s low near 21,875, followed by 21,700. Analysts say the expected expiry range for Nifty is between 21,900 and 22,050-22,100 range.

India Vix at cautious levels

“Volatility index India Vix surged 4 percent above the 16 level. Markets turned cautious ahead of the release of India’s Q3 GDP data on Thursday and the FnO monthly expiry. Further, US Q4 GDP preliminary reading and core PCE data would keep investors busy. We expect the market to remain volatile amid key events, ” stated Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Read more: Nifty falls below 22,000; how are index derivatives placed ahead of tomorrow’s expiry?

As per Soni Patnaik, Assistant Vice President – Derivatives research at JM Financial, FIIs outlook is rangebound to positive for indices and slightly cautious for FnO stocks. Long-Short Ratio remains constant at 45:55 percent.

“Nifty’s expected expiry range is 21,900 to 22,050-22,100, and for Bank Nifty, it’s 45,800 to 46,200-46,300. The options matrix has distorted with significant Open Interest changes in a single day, signalling potential volatility at expiry. Maximum Options Pain is at 22,200 for Nifty and 47,000 for Bank Nifty. Caution is advised in navigating expiry,” says Patnaik.

Expiry day view

“Yesterday’s session’s price action broke below the recent trading range and closed below the crucial 20-day exponential moving average. Furthermore, there’s a close proximity to breaking below a rising wedge formation, coupled with a fresh sell signal in the RSI Smoothened, indicating potential further weakness in the near term. With monthly expiry session, upside potential appears limited, and any rebounds likely to encounter selling pressure. Immediate resistance is anticipated around 22050 – 22100, while support levels to watch are last Thursday’s low near 21875, followed by 21700, ” stated Rajesh Bhosale, Technical Analyst at Angel One.

PCR 0.67 with India Vix at 16.33 up 3 percent suggesting unwinding of puts as nifty closed below the 22000 mark surprising the put writers. CE writers piled up their writing bets at 22100,22200,22300 strikes. Rollovers stood at 68 percent on a falling basis hinting short bets.  Option chain suggests a broader price range of 21800-22100,” said Akshay Bhagwat, Senior Vice President Derivative research at JM Financial.

“Nifty is expected to oscillate around 21,950 within a range of 75 points. A negative tilt is anticipated until it remains below 22,050. A short unwinding trigger is possible only if 22,050 sustains. Resistance is at 22,100, with supports at 21,850 and 21,775,” added Bhagwat.

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