NIFTY OUTLOOK & OPTION CALL PUT TIPS FOR 3 MARCH 2023

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The Nifty opened on a weak note today and continued to drift lower throughout the day to close around the lows for the day down ~129 points. After a positive close in the previous trading session the Nifty did not witness follow through buying interest in fact it has closed below the low (17345) of the previous trading session which is a sign of weakness. Benchmark indices ended lower on March 2 with around 17300 amid selling across the sectors barring realty, power and oil & gas. At close, the Sensex was down 501 points at 58909, and the Nifty was down 129 points at 17321. Global markets turned back to selling mode with the US 10-year bond yield crossing 4% as a fresh set of US data suggested that inflation will remain elevated for a longer period. Rising bond yields are driving foreign money out of emerging markets, and as a result, FIIs were net sellers in the domestic market for the sixth consecutive day. Mid- and small-cap stocks continued to show resilience with mild selling compared to their larger peers. We expect a couple of rate hikes both from the Fed and the RBI and a pause for the rest of the year. With the yield curve flat at the moment, we are positioning at the short end with an opportunist shift to the long end when it spikes. It would not be unrealistic to expect a spike on the 10 year Gsec yield to between 7.8 and 8%. If that happens, duration comes into play and investors can shift their positions to the long end. On the hourly charts we can observe that the rise from the lows of 17250 has been impulsive in nature indicating that a short term bottom is in place and this dip is a retracement of that rise. It is trading in the crucial Fibonacci support zone 17340– 17275 which are the 61.82% retracement level (17340) and 78.6% retracement levels (17275) respectively and we expect the Nifty to hold on to this support and resume it next leg of up move. Overall, we believe that the Nifty is a counter trend pullback mode and the pullback is not complete yet.

Resistance: 17350, 17450, 17550

Support: 17250, 17150, 17050