LAST WEEK
NIFTY opened the week with a gap-down at 16,152 but rallied higher despite weak global cues. There was a gap-down on Tuesday followed by a slow up-move which was sold into, surrendering to global negativity. Wednesday saw a good gap-up opening but there were fears of a weak US inflation data and a huge sell-off happened taking the index below 16,000. Thursday also saw a similar pattern but there was a V-shape recovery on Friday and NIFTY closed the week at 16,049, down by 171 points or 1.06%.
BANK NIFTY opened flat at 35,052 and rallied on Monday. However, the resistance at 35,550 pushed the index down and BNF followed a downward channel in the following days. 35,000 was crossed on Wednesday and the index made an effort to move above the level on Thursday but failed. BANK NIFTY saw buying towards the close of Friday and ended the week at 34,683, down by 441 points or 1.26%.
It was a disappointing week for IT, falling by more than 6%, continuing the downtrend.
FMCG shot up again last week.
Foreign Institutional Investors net sold shares worth Rs 6,000 crores last week.
Domestic Institutional Investors net bought shares worth Rs 2,000 crores.
The US markets closed flat to red. The US inflation came out at 9.1% and this is another 40-year high. But the markets did not react much after the release whereas the European markets fell heavily. However, there was a good buying on Friday and the US markets closed slightly in the red and European markets reduced the losses.
The Asian markets are closing lower except for NIKKEI. Chinese markets are deep in the red. China’s quarterly GDP came out at 0.4% growth and this is the slowest pace since the Covid outbreak.
India’s CPI came out at 7.01% in line with the expectations. May CPI was 7.04%. RBI has again failed to keep inflation within 6%. If inflation is not brought below 6% for another 3 months, RBI will have to give explanation and list the measures to be taken to bring it in the range.
IIP for May has come out at 19.6%, a sharp rise from April’s 7%. But do not forget the low-base effect as there was Covid related slowdown in May 2021.
We had economic data from Europe on Wednesday. UK GDP data and Industrial output data were much better than the estimates. Germany CPI came out at 7.6% in line with the expectations. The previous figure was at 7.9%. But there was no strength in the European markets when the data was released.
SGX NIFTY is at 16,215.
INDIA VIX dropped to 17.6.
WEEK AHEAD
NIFTY has supports at 16,000, 15,940 and 15,870. We can expect resistances at 16,050, 16,150, 16,190 and 16,280.
BANK NIFTY has supports at 34,640, 34,500 and 34,200. Resistances are at 34,840, 35,000, 35,400 and 35,550.
NIFTY has the highest call OI build-up at 16,600. The highest put OI build-up is at 16,000.
BANK NIFTY has the highest call OI build-up at 35,000 and the largest put OI build-up is at 34,500.
Look at the hourly chart. A close near 16,050 is a very strong indication of a bullish move. However, a follow-up would be necessary. HDFC Bank has announced good results and let us see if this will lead to a major move.
Put OI build-up at 16,000 is a bit surprising looking at the confidence of the bullish put sellers. The resistance at 16,280 if broken can lead to more up-move.
Bullard’s statement that he favours a 75 basis points hike and not 100 lifted the sentiments in the US markets and we will see the reflection here as well. This week has less major events except for the quarterly results:
Tuesday: HUL
Friday: Reliance Industries
Saturday: Kotak Bank and ICICI Bank
We have the ECB Press Conference on Thursday where the chances of recession could be discussed.
I will be watching 15,850 on the downside and 16,280 on the upside for the week.
Let us know your expectations for the week in the comments section!