Trade Setup for March 24: Market remains mixed, buy-on-dips strategy

As we move into the expiry week for the March series, all eyes are on the upcoming earnings season for the quarter and the full financial year. The big question remains: Is this recovery sustainable, or are we witnessing just another bull trap?

For the first time in 2025, the Nifty bulls took the lead throughout the week, with no major selling at higher levels. Dips were bought into, stocks saw sustained upmoves, and key levels were crossed, creating a sense of relief after a challenging six months. The Nifty gained nearly 1,000 points (4.5%) last week, driven by a recovery from oversold levels and a lack of tariff-related volatility in global markets. The broader markets also performed well, with the Midcap index rising 7.5% and the Smallcap index gaining 8.5%.

In fact, last week marked the best performance for the Nifty since 2021. The Midcap and Smallcap indices experienced their best week in five years, adding ₹22 lakh crore to investor wealth and taking the BSE-listed companies' market capitalization back above ₹400 lakh crore.

Experts are divided on the market's trajectory. Some believe that the market has already reached a bottom on March 4 or that stocks have become attractive after the recent correction. However, Rajeev Thakkar, CIO at PPFAS Mutual Fund, notes that while valuations are better than three to four months ago, they are not cheap, and there is still froth in certain market segments. On the other hand, Gautam Chhaochharia of UBS Securities believes the market has reached a bottom and that valuations are reasonable both on an absolute and relative basis.

Despite a subdued handover from Wall Street, there was no significant selling pressure on Friday due to the "triple witching" phenomenon, where contracts with a notional value of over $4.5 trillion expired simultaneously.

As we head into expiry week, the focus is also on April 2 when reciprocal tariffs announced by President Donald Trump will take effect. However, the specifics of these tariffs remain unclear, and their impact is still uncertain.

Foreign institutions were net buyers on Friday, although a large portion of this buying was driven by passive inflows. Domestic institutions continued to be net sellers for the second consecutive session.

The Nifty has been trending upwards after a falling trendline breakout, supported by positive sentiment. According to Rupak De of LKP Securities, a decisive move above 23,400 could push the index higher by 200 points, with the next resistance at 23,600. However, failure to break through 23,400 could lead to consolidation.

Nagaraj Shetti of HDFC Securities expects the Nifty to advance towards 23,800 in the near term, with immediate support at 23,250. Amol Athawale of Kotak Securities observes the formation of a bullish candle on both daily and intraday charts, advising a buy-on-dips strategy. The resistance zone is at 23,500, while 23,100 is a key support level.

The Nifty Bank index had a good week, gaining 4.5%, though it was overshadowed by the broader market performance. The index is now nearing the 51,000 mark, which, if crossed, will push it into positive territory for the year. Hrishikesh Yedve of Asit C Mehta Investment Intermediates believes that a bullish candle formation on the daily and weekly charts signals strength, with the next major resistance at 50,650.

F&O Cues:

In the futures and options (F&O) market, Nifty 50's futures saw a 3.2% decrease in open interest on Friday, with rollovers at 23%. The March futures are currently trading at a 29.45-point premium, up from a 9.6-point premium earlier. The Nifty Bank futures also shed 3.2% in open interest, with rollovers at 43.2%.

Key Stocks to Watch:

Godrej Properties: Acquired 10 acres of land in Bengaluru for residential development with a projected revenue of ₹2,500 crore.

NMDC: Normal operations have resumed at all projects after union members returned to work following a wage settlement issue.

IRCON: Faces arbitration claim of ₹158.89 crore.

MSTC: Secured a two-year work order from Coal India for e-auction services.

UCO Bank: Launches ₹2,000 crore QIP at a 9.19% discount to the closing price.

NCC: Received an LoA for a ₹1,480 crore project from Bihar Medical Services and Infrastructure Corp.

Apollo Hospitals: Acquired an 11.2% stake in Keimed for ₹625.23 crore.

Alembic Pharma: Received zero observations from the USFDA after an inspection at its Karakhadi facility.

L&T: Elevated Subramanian Sarma to Deputy MD & President.

As the Nifty approaches key resistance levels and earnings season looms, the outlook for the market remains mixed. With a recovery in progress but concerns over valuation levels and the potential for a bull trap, market participants should stay vigilant and consider a buy-on-dips strategy, especially with the expiry week and global uncertainties at play.