Vijay L. Bhambwani's Ticker: Expiry may usher higher volatility

Subscribe to enjoy similar stories. Dear reader, Last week, I wrote that the average retail trader appeared exhausted. I also advocated that the end of March was likely to be dominated by institutional players.

Mutual funds, hedge funds, and corporate promoters have a vested interest in seeing stock prices rise higher. Last week, we saw the market validate this hypothesis. Last week, I advocated increasing activity in public sector undertakings (PSU) stocks, which occurred along expected lines.

Many of these stocks had fallen extensively in recent weeks, and a minuscule amount of short covering triggered an upthrust. This may continue this week as well provided follow-up buying continues. Traded volumes rose which tells us intraday traders’ participation improved over the prior week.

The market had a feel-good factor due to expectations of a peaceful solution to the Russia-Ukraine war in the near term. The US Federal Reserve provided guidance about possibly lowering rates this year. That raised hopes of lower coupon rates in India, too, in the coming Reserve Bank of India (RBI) monetary policy committee (MPC) meeting.

Lower bond yields in India reflected the same. Lower yields translate to higher bond prices, boosting banking stocks since banks are the biggest bond investors. Since the banking and financial sector commands a weightage of about 34% in the Nifty 50, the rally becomes broad based.

This is why watching heavily index weighted banking stocks becomes crucial in the week ahead. In the commodities space, oil and gas witnessed selling at higher levels. This is along expected lines as I have been advocating that these are well supplied markets.