Long periods of low volatility also reflect complacency of market participants. This may lead to an increase in volatility going ahead and one would need to guard against it.
The weekly options expiry dominated the session on Thursday as the index stayed much within a defined range on expected lines. Apart from that, the Indian markets ended on a disappointing note as it failed its attempt to break out from the falling channel as it slipped inside it again.
The Nifty opened on a mildly positive note and marked its high in the early minutes of the session after which it slipped into the negative territory. The markets stayed negative throughout the session, but mostly remained rangebound. The last hour and a half saw the weakness getting intensified and the index slipped lower, finally ending with a net loss of 124.10 points or 0.83 per cent.
West Bengal election results, COVID, Q4 earnings to set market’s tone this week
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Synopsis
On the futures and options front, traders enthusiastically bought out-of-money call options of Nifty50 expiring on Thursday, suggesting that they expect more gains in the market this week.
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Analysts expect the benchmarks to sustain the gain seen in the previous week but also suggested that profit booking is likely at the slightest hint of nerves in the Street.
MUMBAI: Benchmark equity indices are likely to move in a narrow range in an event heavy week for the market as investors will react to multiple conflicting cues on the economic and political front.