Weekly Expiry Watch: Assessing the Future of FINNIFTY

The Nifty Financial Services Index (FINNIFTY) has approached its weekly expiry on Tuesday, March 5, 2024. This event usually brings increased volatility and speculation in the market, making it crucial for traders to understand the underlying trends and data.

Recent Performance of FINNIFTY

On Monday, March 4, 2024, a day before expiry, the Nifty Financial Services index closed at 20,927.25. The benchmark index opened at 20,852.15 and reached 20,959.80, which was the highest point during the day. However, the price couldn’t be sustained. Overall, FINNIFTY saw a positive trend.

On the expiry day, March 5, 2024, FINNIFTY opened at 20,846.50 (-0.39%). There can be some volatility throughout the day. Market experts suggest that there is a chance for FINNIFTY to be below 21000 in the first weekly expiration of March 2024. Yet, if there is a bullish trend in the market, there can be rapid unwinding, making the benchmark index close above 21000.

Things to Consider Before Investing in FINNIFTY

• Option chain analysis: Examining the open interest and premium on call and put options at various strike prices can reveal where market participants expect the index to move. High open interest in call options at higher strike prices indicates a bullish bias, while the opposite suggests a bearish sentiment.
• Volatility indicators: Analysing the VIX (Volatility Index) can provide insights into expected market volatility leading up to the expiry. A rising VIX suggests increased uncertainty and potential for larger price swings.
• Global market cues: External factors like global economic data and geopolitical events can significantly impact the Indian market and the performance of the Nifty Financial Services Index.
• Technical analysis: While valuable, relying solely on technical indicators like support and resistance levels can be risky, as fundamental factors can significantly influence short-term price movements.

About FINNIFTY

The Nifty Financial Services Index reflects the behaviour and performance of the Indian financial market, including banks, housing finance, financial institutions, insurance companies and more. FINNIFTY comprises 20 stocks that are listed on the National Stock Exchange (NSE). Some of the companies included in the Index are HDFC Bank Ltd, ICICI Bank Ltd, Kotak Mahindra Bank Ltd, State Bank of India, Axis Bank Ltd, Bajaj Finserv Ltd, etc. The index is rebalanced semi-annually. The index is computed using the free float market capitalisation method.

Finnifty Index Value = (Current Market Value of Free Float Market Capitalisation / Base Market Value of Free Float Market Capitalisation) x Base Index Value (1000).

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.