India’s benchmark Nifty witnessed a choppy trading session today. The index has bounced back 165 points intraday and closed at 17,100 (spot). Institutional buyers might enter tomorrow if Nifty sustains above tomorrow's range low and the Call option gamma falls in line with the neutral zone.
Have The Buyers Entered?
Neither the Institutional Buyers nor the Sellers have entered the market yet; this is what is creating an air of uncertainty ahead of upcoming Federal Reserve Monetary Policy on 22nd March 2023. Today’s fall of 188 points in the first half and the recovery of 165 points in the second half is a sign that the buyers and sellers are still aggressively fighting to take control of the index. Our 3D delta software indicated a possible bounce intraday. The only cautious point here is this bounce was not backed by buyers. This bounce was a mere shorts that were being covered.
Will The Choppy Moves Continue?
This is the 3rd week of the march monthly contract, and Nifty still has not formed a clear direction. India VIX generally hovers above 16, whenever the market enters an uncertain territory ahead of a high-profile event. It is indeed surprising thus, that India VIX has closed at 14.77 today with just 5 trading days to the Fed Rate session. Three important factors are likely to play a critical role in trend formation here on.
Firstly, the Call option gamma must fall in line with the neutral zone.
Secondly, institutional buyers must participate in the market.
The third possibility is the participation of institutional sellers, which at this point looks remote but cannot be ruled out since the trend has not been formed.
However, if none of the above conditions are met, markets are likely to remain choppy until the federal reserve monetary policy brings in more clarity into the Indian markets.