NIFTY (7733) / SENSEX (25229)
The domestic market maintained its southward direction throughout the week as the benchmark indices closed with week with a loss of almost 1.5% from the previous close. Even in today’s session the index NIFTY spot closed in red but the good news is that the markets trimmed most of its loss as the day progressed. During the process, the index sneaked below the critical support of 7697 but failed to sneak below the next level of 7670 and closed well above the 7700 mark. Yet again there was lot of choppiness today since the investors turned cautious ahead of a US payrolls report for April that could influence bets on future US rate hikes. On the whole it was a tug of war between the bulls and a bears wherein the bulls has the upper hand as they manage to retaliate right from the beginning.
On the global front, European indices like FTSE (-0.87%), CAC (-1.29 %) and DAX (-0.71%) were trading with significant loss while the time the report was made.
The Asian Indices like NIKKIE (-0.25), HANGSENG (-1.36%) and SHANGHAI (-2.9%) displayed weak trend in today’s session.
On the sectoral front, apart from the NIFTY PHARMA (-1.00%) and NIFTY IT (-0.79%) none of the sectors closed in red.
From the list of gainers, NIFTY PSUBANK (+1.66%) stocks outperformed the most after and were followed by NIFTY AUTO (+0.77%) and NIFTY REALTY (+0.32%) stocks.
The broader markets still remained under pressure as the MID100 (+0.28%) and SML100 (-0.15%) indices ended with profit booking.
In the currency market, all the pairs ended in green indicating some pressure in the INR.
On the stock front, PSU bank stocks gained after Lok Sabha passes Insolvency and Bankruptcy Bill. On the other hand, Inox Wind stock ended 17% lower at Rs. 241 after Q4 results.
Technical Outlook
The benchmark index Nifty has been forming small body candlestick for past two sessions. Today’s price action has taken a shape of a Hammer candlestick pattern, suggesting possibility of minor pullback in upcoming sessions. However, weekly structure of the chart remains weak. The daily smoothen indicator has exited from overbought zone and pointing downward, conversely intraday smoothen indicator is trading in oversold zone and minor pullback from current level cannot be ruled out.
For the upcoming week, resistance is placed at 7830 while support is around 7720---7650. A decisive move below 7720 level can drag index to 7650 levels. Further downside panic will see only close below 7650 mark to 7550--7480 since 38.2% Fibonacci retracement level & swing low is placed this range.
Key point to note on the Nifty Bank front is that, it has formed evening star candlestick pattern, suggesting weakness. The Nifty Bank index has strong resistance in the range of 16420 – 16660 -- 16800 levels, on the flipside support can be seen at 16080 – 15560 levels. Readers should note that, a close below 16080 can drag Nifty Bank index to 15560 levels. The India VIX has been sustaining above breakout level of 17, proposing likelihood of testing key resistance of 19 levels. A move above 19 in India VIX could accelerate momentum in the benchmark index.
FII’s activity
Cash Market: This week FII’s have sold 748 cr. in the equity markets; whereas DII’s bought 728 cr. Consequently up till now in the MAY F&O series, FII’s have been net seller in the cash segment to the tune of 953 Cr. while DII’s have bought 756 Cr. in the cash market.
F&O Segment: On the F&O front FII’s have been net seller for the week, they sold 5584 cr. in Index Future and 1251 cr. in the Stock Futures. Meanwhile in the Index Option they bought 724 cr.
Index Option Tracker
The Call PUT concentration is at 8000 strike CE with an open interest of 65.85 lakh shares. On the other hand, highest PUT base is at 7700 strike with 44.44 Lakh shares.
In the May series, this week CE options added 1.45 cr. shares in open interest with fall in price; on the other hand PE option added 22.40 lakh shares in open interest with a fall in price.
The highest activity was seen in the 7900 - 8200 strikes CE with aggregate open interest of 2.23 cr., on the flipside highest PE activity was seen in 7000 and 7500 – 7700 PE strikes to the tune of 1.29 cr.
On Friday’s session fresh call option writing was observed in 8000 strike CE along with unwinding in 8100 & 8200 CE
On the Put option fresh writing was seen in 7500 strikes and unwinding was seen in 7400 PE
Conclusion
The benchmark index appears to have taken breather after seven days decline. Technical evidences suggest that, minor pullback to 7830 cannot be ruled out. Whereas FII’s carry on with their bearish bet on the market. As data suggests that, they have liquidated Index futures for the seventh consecutive session with an incremental rise in fresh shorts. At the same time they have been writing call options along with fresh long in put option. Derivative data indicates, immediate support is placed at 7720--7650, below which next support is at 7550---7480 levels. On the flipside resistance is at 8000 level. Accordingly, as far as Nifty trades below 8000 pullbacks can be used to create fresh short positions. Three consecutive closes + weekly close above 8000 will see a fresh upside move in it.
Weekly top pick
Asian paints... We have seen positive momentum on friday. A break and close above 890 will take to 920---945+ mark in days to come.
Support seen at 860.
Trade with levels only. More levels will update during market hours
