The week ahead: Derivative contract expiry to keep markets volatile

The week ahead should see higher-than-expected volatility as derivative expiry on Thursday will see bulls and bears match forces.

The Nifty continues to flirt with 6,500 and has been stuck around these levels for the last 2 weeks, with 6,470 on the downside and 6,550 on the upside. The week gone by also saw a flat Nifty, which ended the week down 0.16 per cent.

The high beta 'Bank Nifty' ended the week up 0.30 per cent, while the CNX IT index was down 0.73 per cent.

For a second consecutive week, key indices hit life time highs but failed to sustain as profit-booking emerged at higher levels. Sentiment was dampened after Federal Reserve Chair Janet Yellen hinted that the US central bank may increase interest rates earlier than expected. It led to fears that dollar infows into the country would be hit.

With the IT index going through a pullback and large caps trading sideways, it continues to be choppy. Despite this lack of leadership, the index is in an intermediate uptrend as long it holds above 6,415 levels. However, recent activity is suggesting that index is distributing at higher levels and is there is case of limited upside from current levels.

The week ahead will see Supreme Court hear the Reliance gas pricing petition and could be the trend decider as Reliance is the heavyweight bellwether which can see the Nifty head above the 6,550 levels.

Foreign flows continue unabated and should see the Nifty head higher as despite negative global cues foreign investor conviction on India continues to strengthen.

The Reserve Bank of India policy meet on April 1 will be the next event to be watched by the markets, with no change in policy rates being the consensus on the Street.

Top 3 gainers

They were: Maruti, up 7.5 per cent, Hindalco, up 7.2 per cent, and Tata Steel, up 6.3 per cent.

Top 3 losers

They were: M&M, down 5.5 per cent, Gail, down 5.2 per cent, and ONGC, down 5.1 per cent.

The surprise of the week was the Rupee which closed at 3-month highs below 61, which again highlights a slow but sure improvement in economic fundamentals, expectation of higher growth in GDP, strong foreign flows, better management of the current account deficit & reforms to kick-start the stalled investment cycle.

Sanjeev Bhasin is an independent market analyst. The opinions expressed here are the personal opinions of the author. NDTV is not responsible for the accuracy, completeness, suitability or validity of any information given here. All information is provided on an as-is basis. The information, facts or opinions appearing on the blog do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.