Nifty's expiry this week can add to volatility

Nifty had the much awaited correction giving up almost 3 per cent for the week, says Jaykrishna Gandhi, Head - Business Development, Institutional Equities, Emkay Global Financial Services.

The sell-off was even more brutal within the small and mid cap space as retail investors finally seem like throwing in the towel on back of lackluster earnings and no clear positive commentary from management, he said.

The market sell-off was triggered by the US 10yr hitting the 5 per cent mark which pulled down risk levels materially in the region.

Nifty will have its expiry this week which can add to further volatility, we see Bank Nifty at the highest risk below the 43K levels with support at 42,200 levels which in turn can drag the market below 19K towards the strong support levels of 18,800, he said.

All eyes will be on the US 10yr, the geopolitical uncertainty along with the FOMC commentary to get direction for the week forward, he said.

Vinod Nair, Head of Research at Geojit Financial Services said investor sentiment is on edge as tensions in West Asia continue to drag the market.

Despite a drop in oil prices and an optimistic view of the progressing Q2 results season, investors took a cautious approach due to the expectation that a higher interest rate scenario would continue slowing future growth.

However, a positive strategy is evident on large-cap stocks, amid growing geopolitical worries and valuation concerns in mid- and small-cap stocks, he said.