Sensex, Nifty snap 3-day winning run; volatility up ahead of F&O expiry, end of FY24

Benchmark indices the Sensex and the Nifty snapped a three-day bull run to end lower on March 26 as volatility rose ahead of monthly F&O expiry. Analysts expect the market to remain sideways in the holiday-truncated week as the financial year 2023-24 winds down.

The Sensex settled 0.5 percent lower at 72,470  and and the Nifty was down 0.34 percent at 22,020. The fear gauge India VIX  jumped more than 4 percent to end around 12.79.

Analysts at ICICI Securities said bouts of volatility expected in the next few days offer incremental buying opportunities. "Buying-on-dips would be a prudent strategy to adopt as a strong support is placed for Nifty at 21,700," they added.

Anand James, Chief Market Strategist, Geojit Financial Services, said that this week would lack directional moves for markets, with limited upside objective of 22,400-500. "The downside marker may be placed near 21,920, until above which, a buy-on-dips approach could be taken early in the week. Nifty's direct fall below the 21,810 region could force us to reconsider 21,400-20,900 as downside," he added.

Broader markets saw some buying despite concerns of 'frothy' valuations. The Nifty Midcap 100 and Nifty Smallcap 100 indices gained up to 1 percent on February 26.

ICICI Securities analysts believe that much of the price correction in midcap and smallcap pockets are behind and expect these indices to undergo base formation over the next few weeks. "Post the recent correction, many quality companies have approached their key support. Investors should focus accumulating quality stocks from long term perspective," they underlined.

Sectorally, Nifty Realty index was the top performer as Phoenix, Prestige Estates, Oberoi Realty, and Godrej Properties surged up to 6 percent. On the contrary, Nifty Media index was the worst sectoral performer, with losses being led by Sun TV, PVR-Inox, Dish TV, and Zee Entertainment.

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