Synopsis : The stock market is showing bullish signals in key sectors such as Cement, Realty, IT, and Power, driven by strong long build-ups and Foreign Institutional Investors’ (FIIs) sustained interest. Despite concerns surrounding derivative expiry and upcoming Q4 earnings, optimism remains high. The Nifty IT Index is reversing its downward trajectory, while the CPSE Index is poised for long-term gains. Meanwhile, the broader Nifty 50 is seeking fresh cues amidst global economic uncertainties.
Stock Market Poised for a Potential Upsurge
The previous trading week saw a mixed sentiment in the stock market. While some investors viewed the market movement as a relief rally, others saw the beginning of a new bullish phase. However, rejection trades surfaced across various segments, indicating hesitation in the uptrend. Despite this, bullish sentiment remained intact, as demonstrated by Thursday’s sharp rise, which negated a potential downtrend signaled by the evening star pattern.
With the market now entering a new derivative series and earnings season around the corner, investors are looking for fresh triggers to sustain the rally.
FIIs' Role in the Market's Bullish Momentum
A key indicator of market strength is the behavior of Foreign Institutional Investors (FIIs). Over the past week, FIIs consistently held more than 30% of their index future positions as long trades, a significant improvement from sub-20% levels at the start of the month. By the end of the week, the long position in index futures had increased to 35%, reinforcing the idea that the recent short covering was not just a product of derivatives expiry but also part of a broader bullish outlook.
With FIIs continuing to add long positions, the uptrend in Nifty is expected to sustain, potentially driving more gains in the near term.
March Expiry Insights: Key Trends
The derivatives expiry provided crucial insights into market behavior:
Nifty rollover for March stood at 76.09%, below the three-month average of 80.15%.
Bank Nifty rollover was 76.98%, lower than February’s 81.64%.
A staggering 78.50% of stock futures ended positively, compared to just 17.06% in February, indicating stronger market confidence.
The highest rollovers were observed in stocks such as RBL Bank, Crompton Greaves, Mahanagar Gas, Infosys, and Tube Investments of India. Conversely, stocks like DMart, HCL Technologies, Phoenix, and Bajaj Finserv witnessed lower rollovers.
Sector-wise, Consumer Durables, Auto, Power, and Infrastructure saw the highest rollovers, whereas Oil & Gas had the lowest. Notably, the Cement, Realty, and Power sectors experienced significant long build-ups, signaling continued investor confidence in these industries.
IT Sector on a Recovery Path
The Nifty IT Index, which had been on a declining trend since December 2024, is now showing signs of reversal. Having found support at a broadening wedge pattern, the index is maintaining an upward trajectory. If momentum continues, the index could initially target 40,200 and later 42,380, a critical Fibonacci retracement level.
Market indicators further strengthen this view. The Relative Strength Index (RSI) of major IT stocks is hovering around 50, hinting at improving strength. Stocks like Tata Consultancy Services, Infosys, HCL Tech, LTIMindtree, Tech Mahindra, and Persistent Systems are likely to drive the sector’s recovery, especially with Q4 earnings season approaching.
Nifty CPSE Index: Bullish Consolidation Underway
The Nifty CPSE Index recently broke out of its falling trend channel but followed up with a doji pattern, indicating indecision in the short term. Despite this, the broader trend remains positive. A monthly tweezer bottom pattern suggests that the uptrend will likely resume after a brief consolidation.
The SMIO histogram’s recent reversal supports the notion of an early pullback. Key stocks expected to gain strength within the CPSE Index include Oil & Natural Gas Corporation (ONGC), National Hydroelectric Power Corporation, Bharat Electronics, Coal India, Oil India, NTPC, NLC India, and SJVN. These stocks are likely to push the index towards its 6,575 target level.
Nifty 50: Key Levels to Watch
The broader Nifty 50 index is caught between the start of a new derivative series and looming global economic uncertainties, including U.S. tariff threats. Given these factors, the index is currently searching for fresh directional cues.
The 23,800-24,200 range has been identified as a crucial supply zone, attracting rejection trades. If the market pulls back, it could test levels around 23,300 or even 23,050. However, any sharp decline towards 22,650-23,050 could trigger bargain-hunting, potentially rejuvenating the uptrend.
A sustained recovery from lower levels could push Nifty towards 24,857, which remains the near-term upside target.
Conclusion
With strong long build-ups in Cement, Realty, IT, and Power sectors, and FIIs continuing to support the market, the overall sentiment remains bullish. The IT sector appears to be recovering from its recent downtrend, while the CPSE Index is poised for further gains. Investors should closely monitor key levels in Nifty 50, as fresh cues will determine the next market movement in the coming weeks.
Disclaimer : This article is for informational purposes only and does not constitute financial advice. Investors should conduct their research or consult financial professionals before making investment decisions.
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