Trade Setup for March 10: Nifty poised for 23,000 or to early to get carried away?

The Nifty had its best week in three months, a first positive week after four, and yet it almost feels like an eternity since there was any green on the screen.

There is no denying that the bulls will take comfort from the fact that the Nifty has recovered nearly 600 points from last Tuesday's low of 21,964 and will definitely be hoping that this is now the new base for the index to move higher.

Another positive is the move seen on index heavyweight Reliance Industries over the last two trading sessions. The stock has moved over 6% over Thursday and Friday and has been the single-biggest factor in this Nifty recovery.

The Nifty has closed above 22,500 and the first task for the bulls will be to protect that level as we head into a truncated week. Wall Street had an extremely choppy session on Friday but the benchmark indices eventually ended in the green and that may also provide some comfort to the bulls.

There have been enough and more positive triggers for the markets last week but the reaction has only come over Wednesday and Thursday. Friday's session, despite being choppy, was rangebound and flat. There has been liquidity measures announced by the Reserve Bank of India, the US Dollar index has been cooling off, which resulted in the Metals rally, oil prices are at multi-year lows, benefitting oil sensitives. Yes, there is this looming uncertainties around tariffs, but experts believe that it is here to stay.

Add to that is comments from Finance Minister Nirmala Sitharaman, who said that GST rates might come down further, although she did not elaborate on when, and on which products would the rate rationalisation happen.

Foreign institutional selling continued on Friday but the number has either remained constant or has seen some decline from the heavy selling figures seen earlier. Domestic institutions remained net buyers.

Despite the recovery of the last few sessions, is it too premature to get carried away and start to believe that the sentiment has turned for good? or the indices have made a bottom and will now start to make a dash higher?

Rajesh Bhosale of Angel One said that it will be too early to say that the correction is completely over as the bounce has taken place after a sharp correction over the last few weeks. There are important resistances that still lie ahead for the Nifty at 22,700, which is a bearish gap on the daily chart, along with 22,800. Immediate support zone is between 22,350 - 22,250 levels.

The bulls are likely to return to action if the Nifty sees a sharp move above 22,750 - 22,800 levels, said Nagaraj Shetti of HDFC Securities. Any dip from here can find support at 22,250.

LKP Securities' Rupak De believes that the sentiment remains positive on the Nifty with significant put writing at 22,300 and call writing at 22,800. Immediate resistance is between 22,700 - 22,750, while support on the downside is at 22,400.

The liquidity easing announcements made by the RBI and some other rules relaxing norms for banks and NBFCs have not had a significant impact on the Nifty Bank which has continued to trade in a narrow range. Although the index ended the week absolutely flat, it was an underperformer compared to the Nifty and has also closed near the 48,500 mark.

The Nifty Bank has formed a red candle on the daily chart indicating a strong resistance near the 48,660 mark and a sustained move above that level can trigger fresh moves towards 49,000. On the downside, 47,840 is a firm support, said Hrishikesh Yedve of Asit C Mehta Investment Interrmediates.

Om Mehra of SAMCO Securities said that the Nifty Bank is positioned near a descending trendline on the hourly chart, which aligns with the supertrend indicator at 48,720. A decisive breakout above that level can trigger a fresh upmove, driving the index towards 49,000. Immediate support is at 48,200, followed by 48,120.

What Are The F&O Cues Indicating?

Nifty 50's March futures shed 0.3% on Friday or 51,750 shares. They are now trading at a premium of 97.45 points from 76.25 points earlier. On the other hand, Nifty Bank's March futures added 0.3% or 7,170 shares in Open Interest on Friday. Nifty 50's Put-Call Ratio is at 1.07 from 1.14 earlier.

Hindustan Copper and Manappuram Finance are two stocks in the F&O ban.

Nifty 50 on the Call side for March 13 expiry:

On the Call side, the Nifty 50 strikes between 22,600 and 23,000 have seen Open Interest addition for this Thursday's weekly expiry.

Nifty 50 on the Put side for March 13 expiry:

On the Put side, the Nifty 50 strikes between 22,300 and 22,600 have seen Open Interest addition for this Thursday's weekly expiry.

Fresh long positions were seen in these stocks on Friday, meaning an increase in both price and Open Interest:

Fresh short positions were seen in these stocks on Friday, meaning a decline in price but an increase in Open Interest:

Short covering was seen in these names on Friday, meaning a decline in Open Interest but an increase in price: