LAST WEEK
NIFTY opened flat at 16,295 on Monday, faced resistance at 16,400 and closed just above 16,200. The index traded in a bearish channel till Thursday noon. The index took support at 16,100 on Tuesday and opened with a gap-up on Wednesday only to fall to 16,000. There was a huge down-move on Thursday and a fierce recovery in the second half. There was extreme volatility and the index closed around 16,200. There was follow-up on Friday and NIFTY closed the week at 16,352, up by 0.5%.
BANK NIFTY was bullish last week. The index opened flat at 34,330, faced resistance at 34,800 and fell. There was consolidation on Tuesday followed by a gap-up opening on Wednesday. However, the resistance zone near 34,800 kept pushing BNF down, even after the index opened with a gap-up on Thursday. But BANK NIFTY took strong support above 34,400 on Thursday and gave a stellar recovery and closed above 35,000. The follow-up on Friday led BNF to close at 35,613, up by 1,337 points or 3.9%.
IT closed flat but is continuing the bearish trend. Metal stocks, the most moving sector nowadays are nearly 9% down WoW.
Foreign Institutional Investors net sold shares worth Rs 10,000 crores last week taking the monthly figures to 44,000 crores.
Domestic Institutional Investors net bought shares worth Rs 11,000 crores and the monthly figures stand at 47,000 crores.
The western markets are in recovery mode. The US markets have moved up by more than 6% last week! The European markets are 3% in the green WoW. But the Asian markets are in consolidation mode though there is intraday volatility. At the same time, remember that the Chinese markets had not fallen like the US markets in the beginning of the month and hence they stand similar on a monthly basis.
Raphael Bostic, one of the Fed’s dovish policy makers said that he stands for a pause in rate hikes in September. Powell in his speech on Tuesday said for the first time that the Fed may not be able to defend recession. When the Fed minutes came out on Wednesday in line with the expectations, the markets rallied.
Other major events of the week were:
Metals fell by 8% as export duty of 15% was imposed on steel. Also, the import duty on raw materials was decreased. This was done to reduce the cost of domestic production.
RBI Governor hinted that there will be rate hikes in the coming meetings, the next being on 8th June.
ECB member said that he would appreciate a 50 bp hike in July.
Bostic, one of the dovish policy makers, said that he stands for a pause in rate hikes in September.
Snapchat fell by 43% on Tuesday as the forecasts were weak.
Powell in his speech on Tuesday said for the first time that the Fed may not be able to defend recession.
Joe Biden replied positively to whether the US would interfere militarily if Taiwan was attacked. This angered China and they conducted a military drill near the Taiwan border and expressed their discontent. White House clarified that the President meant only military aid and not a direct intervention.
The US quarterly GDP was expected to shrink by 1.3% and it did shrink by 1.5%. However, there was an increase in consumer spending.
SGX NIFTY is at 16,435.
INDIA VIX is at 21.5 and the US VIX has reduced to just below 26.
WEEK AHEAD
NIFTY has supports at 16,300, 16,240, 16,000 and 15,900. We can expect resistances at 16,400, 16,450, 16,600 and 16,680.
BANK NIFTY has supports at 35,400, 34,800 and 34,400. Resistances are at 36,000,, 36,400 and 36,800.
Excluding deep strikes, NIFTY has the highest call OI build-up at 16,300 followed by 16,500. The highest put OI build-up is at 16,000 followed by 16,300.
It is an unusual straddle build-up at 16,300.
BANK NIFTY has the highest call OI build-up at 36,000 and the largest put OI build-up is at 35,000.
Our quarterly GDP growth rate will be out on Tuesday. There are diverse estimates ranging from 2.7% to 5.5% with some saying that the Ukraine war and the crude oil prices might have impacted the GDP severely whereas some economists feel that the war might not have impacted much as the retail fuel prices were hiked only after the state elections.
Germany’s inflation data will be out on Monday and the Eurozone inflation data will be out on Tuesday with expectations around 7.7%. The Chinese PMI data to be released on Wednesday will be important as the economy was affected by the lockdown. Beijing has partially reopened and the Shanghai lockdown may end on 1st June.
The US markets will be on holiday tomorrow as it is Memorial day. The hawkish policy maker Bullard will speak on Wednesday.
Let us watch the events closely and keep an eye on the levels 16,400 on the upside and 16,200 on the downside. Looking at a wider range, 15,900-16,700 is a zone for NIFTY to trade in the coming days.
Let us know your expectations for the week in the comments section!