Nifty may trade in 17405-17774 range amid high volatility

NSE Nifty closed positively after a highly volatile day. It recovered 243 points from the day's low. The benchmark index closed at 17648.95, with 44.60 points or 0.25 per cent gain. The Nifty IT index is the top gainer with 1.10 per cent. Bank Nifty also recovered sharply and closed 0.10 per cent higher. FinNifty advanced by 0.33 per cent. The Energy index is the top loser with 3.04 per cent. All the other sectoral indices ended with less than half a per cent losses. The market breadth is negative as 1188 declines and 763 advances. About 136 stocks hit a new 52-week low, and 113 stocks traded in the lower circuit. Adani Enterprises, Adani Ports and ICICI Bank were the top trading stocks today in terms of value.

It's another day of high voltage volatility, with a 300-point intra-day range. The Nifty was able to recover from the day's low and closed positively. The Nifty has formed a Hammer kind of a candle on a positive index breadth. Monday's low of 17405 will act as crucial support for the next two days. At the same time, on the upside, the 17774 will act as resistance. With increased daily ranges, volatility will play a major role in the market. The Implied Volatility (IV) surged to 17.34 before the event risk. With this, the option premiums have become expensive. After a decline of 795 points in just four days, the Nifty has recovered above the 23.6 per cent retracement level. This recovery has not changed the technical structure of the Nifty. It needs a close above today's high of 17709 for short-term positivity. Apart from the Hindenburg report on the Adani Group, the Union Budget may be a big trigger for the market direction.

The Nifty may breach the 17405 till the Budget presentation. The Nifty closed below the lower Bollinger Band for the second, and expect it will come into the bands by Tuesday. This means Monday's low may not breach unless more negative news spoils the sentiment. The Nifty may trade in the 17405-774 zone, with higher volatility. High beta stock will trade with increased volatility. For now, it will be difficult to trade on either side. Only proper risk management will protect the capital. Weak and emotional traders are advised not to venture into the market.

(The author is Chief Mentor, Indus School of Technical

Analysis, Financial Journalist, Technical Analyst, Trainer and Family Fund Manager)