Budget 2024: F&O traders brace for high volatility today; trading strategy, Nifty levels to watch

Ahead of the Budget 2024, traders chose to be fence sitters.  Analysts said positive announcements could push Nifty beyond 21,850, and that the index could aim for all-time high levels around 22,100. A Nifty fall below 21,400 and 21,200 levels may trigger a substantial selloff, they warned.

In the futures and options (F&O) segment, strong put writing, along with exit of call writers, was observed at the Nifty strike of 21,500. Put writing at a particular strike price is usually considered as a sign of support getting stronger and strong possibility of prices moving higher.

"The put writers have further strengthened their position at 21,500 Strike in Nifty. The 21,500 Strike on the downside & the 21,800-strike on the upside will be the two key levels to watch out ahead of the budget announcement," said Ashwin Ramani, Derivatives & Technical Analyst at SAMCO Securities.

Ramani noted that the long short ratio dipped marginally to 22.03 per cent on Wednesday against 22.64 per cent in the previous day, as foreign portfolio investors (FPIs) activity remained subdued in index futures.

"Option data suggests a broader trading range between 21,300 and 22,200 zones while the immediate trading range is between 21,500 and 21,850 levels," said Chandan Taparia of Motilal Oswal Securities.

Technical outlook

Historically, interim budgets tend not to include major reforms, said Rajesh Bhosale, Technical Analyst, Angel One. He said positive announcements could push Nifty beyond 21,850, and that the index could aim for all-time high levels around 22,100.

"Conversely, a break below 21,400 and 21,200 may trigger a substantial sell-off. Expect heightened volatility on Budget day, and traders are advised to exercise caution, avoiding undue risks and waiting for the market to stabilize before making aggressive moves," Bhosale said.

Rupak De, Senior Technical  Analyst at LKP Securities said Nifty formed a Piercing Line pattern on the daily chart, following a Dark Cloud Cover in the preceding trading session.

"This consecutive complete reversal pattern indicates a highly volatile market sentiment. The trend may continue to be volatile on Thursday, especially as the interim Budget will be delivered. Support on the lower end is situated at 21,500, while a decisive move above 21,750 might trigger a rally towards 22,100 and beyond."

Jatin Gedia – Technical Research Analyst at Sharekhan said considering the event of interim Budget volatility is likely to continue. He sees key support for Nifty at 21,550–21,500 while he see immediate hurdle zone placed at 21,850–21,900.

 

 

Also read: Budget 2024 live: FM's speech at 11 am, taxpayers, investors wait with bated breath

Also read: Paytm shares update on RBI restrictions. Key highlights