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India VIX keeps Nifty's 23,000 hopes on ice, says Geojit's Anand James - The Economic Times

Published 2 months ago5 minute read
India VIX keeps Nifty's 23,000 hopes on ice, says Geojit’s Anand James
By , ETMarkets.com
, suggest that caution is still lurking and making it tougher for Nifty to zoom past 23,000, says Anand James, Chief Market Strategist, Geojit Financial Services.Edited excerpts from a chat:

Indeed, a sense of relief, albeit brief, has replaced the utter panic that gripped global financial markets early last week. As more visibility has emerged in terms of worst-case scenarios of the trade war, global indices have begun to show signs of heading higher. That Nifty managed to keep overnight gains intact on Friday is a signal toward this end. However, the fact that VIX fell just 6% on Friday does not sit well with a projection beyond 23,000 for now. We are still over 46% above the VIX levels seen prior to last week’s mayhem, suggesting that caution is still lurking. With this in perspective, we are not keen on committing beyond 23,000 for the time being, unless there is a drastic fall in VIX. With a shortened trading week, the odds of that remain low.The index has seen a steady bounce back since mid-March but faced a hurdle around the rising trendline resistance of 52,100, from where we saw a pullback on Friday. A large green candle on the weekly scale, average RSI of index majors below 50, and a close above the 50-week SMA are expected to push the index toward 52,400. But caution continues as index majors like HDFC Bank and ICICI Bank are coming out with their Q4 earnings in the coming week. HDFC Bank and ICICI Bank which form more than 50% of the index are technically looking neutral to negative, pointing to a potential for rejection trades reappearing after initial bullishness. Kotak Bank and Axis Bank, which are looking positive, could lend support to the index if the other majors pull back.

The rejection trades from the 20-day SMA have apparently nipped the recovery move in the bud. With oscillators pointing to directional moves, we feel that the stock is poised to head much lower, with 1,756 — November’s first-week low — seen as the initial landing point. Alternatively, if the 1,960 region manages to attract bargain hunting, the anticipated down move may be negated.
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VIX continuing to stay above 20 is an indication that volatility expectations remain high. This will change only if we sustain trades above 23,000 in the coming days. However, we do not feel that the holidays will see traders staying away. In fact, volumes are not likely to fall sharply as we also have the weekly expiry falling at the end of the truncated week.The stock has been in a pullback since the beginning of this year and remained within a falling wedge pattern since March. This week, we have seen the stock break out of the pattern, and the weekly SMIO has moved above the zero line for the first time this year, which is painting a rosy picture for the stock in the near term. We expect the stock to move toward 650 in the next few weeks. All longs may be protected with a stoploss placed below 573.

The upside that we saw since 2022 got over in January 2025, from where it retraced 61.8% to 375. It saw a bounce back from 375, forming a hammer candle in the monthly time frame and a bullish Marubozu candle on the weekly scale, hinting at strength in reversal. Daily SMIO is expected to move above the zero line soon, which could bring in more positivity to the stock. We expect the stock to move toward 484. Protect all longs with a stoploss below 417.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)

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Subscribe to ET Prime and read the Economic Times ePaper Online.and Sensex Today.

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