Of late, Dalal Street investors have embarked on a roller-coaster ride amid weak global cues, inflationary concerns and endless sell-offs by foreign institutional investors.
On Friday, the equity benchmark Sensex surpassed all intraday gains and closed at 52,793.62, down 136.69 points or 0.26 percent. During the day, the 30-stock index rose 855.4 points, or 1.61 percent, to 53,785.71. The Nifty was down 25.85 points, or 0.16 percent, at 15,782.15.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, said: “This is a season of headaches for the market. High inflation in the US and rising yields of Hawkish Fed bonds have negatively impacted the equity market. “After all, the CPI inflation in April has reached an alarmingly high level of 7.79 percent. The RBI has no choice but to go awry at the forthcoming policy meeting.”
Vijayakumar added that the positive side is that all these bad news are already known and factor-in by the market.
“The Nifty has ended the 50-week sharply negative and is now trading near a strong support level of 15,700 which coincides with the lower end of the downward sloping channel,” said Yesha Shah, Head of Equity Research, Samco Securities Business Today.
“Banknifty is also trading near the support line of the rising trend line formed from the bottom of March 2020. Both Indian and major global indices are now oversold. Therefore, immediate return to Nifty and Banknifty is highly likely. Long trades can start with a drastic stop loss below. Instant resistance is now set at 16,600, “Shah added.
The following week, Shah said that WPI data for India would be released and listed on the much anticipated IPO, LIC, exchanges. Apart from these, no other big event is expected. In the absence of any positive catalysts, the indicators are expected to remain under pressure as each bounce is being sold. Investors are therefore being urged to stay on the sidelines as it is better to wait for the storm than to fish down in such turbulent stages.
Samit Chavan, Chief Analyst-Technical and Derivatives, Angel One Ltd. noted that global macro factors have put a lot of pressure on financial markets around the world and we certainly are not immune. The oversold market is in a denial mode to give a small recovery, in fact, Friday’s rebound has completely sold out towards Fag End. This is certainly not a good start for the bulls.
He added that the recent low of 15671 is not too far from the current level now and the moment we move below it, it will create a panic situation in the market. Below this, be careful for the next 15350 – 15200 levels On the contrary, 16000 – 16200 has now become a difficult obstacle. The first signs of relief are possible only above this level. Until then, one must avoid trading aggressively in the market.
“While the trend is strongly bearish at the moment, we advise investors with a slightly broader timeline, to start nibbling quality offers in a staggered manner. “She is OK.
Sharing a technical perspective, Palak Kothari, a research associate at Choice Broking, said the Nifty has created a bearish candlestick on the weekly chart that indicates negative momentum for the upcoming session. Moreover, the Nifty has faced resistance from the rising trendline and has shown selling pressure which is a sign of higher selling levels.
Also, Kothari said the Nifty head and shoulder pattern survives below the neck line which points south for the upcoming session. However, the Momentum Index MACD and Stochastic were trading with a negative crossover and entered the oversold zone. However, so far, there is no reverse sign.
“The Nifty may find strong support near the 15,700 level, while the Nifty crossing above the 16,100 level could act as an immediate barrier to attract new purchases. On the other hand, the Bank Nifty supports the 32,600 level while the 34,000 level resists,” he added. .
According to Mohit Nigam, Head – PMS, Hem Securities, the immediate support and resistance for the Nifty is 15,600 and 16,000, respectively. Immediate support and resistance for Bank Nifty is 33,000 and 34,000, respectively.
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