Market Analysis for May 05, 2022
Post Market Report & Nifty Chart Analysis
Today the RBI took away the limelight from LIC. It was supposed to be a big day for LIC. But, the RBI Governor had other things in mind.
RBI Governor announced an off-cycle 40 basis points rate hike today. Usually, it is announced post the bi-monthly monetary policy meet. But, RBI has intervened owing to the rising inflationary environment. A late reaction by the RBI given that both CPI and WPI inflation have been on the rise for several months.
The markets reacted negatively to the sudden RBI rate hike. Nifty was down by 2.29%.
Nifty Futures almost fell by 500 points Intraday. Price was trading below the Open from the start indicating that the Bears were in control in the Intraday timeframe from the word go. Remember that the Bears are in control in the Daily Timeframe as well. So, you should have avoided bullish trades for the day.
We have been maintaining a Bearish view over the last few days as price is still below the key level of 17230 in the daily chart. Price almost touched the third target of 16635 on the downside. If 16635 is broken the next support level is likely to be 16454.
FIIs sold for ₹3288 Crores in the cash market and DIIs bought for ₹1338 Crores.
FIIs have added huge short positions today on the Index and overall they are heavily short. This is the highest shorts that they have held over the last 1 year. Even during the Russia-Ukraine war saga, they were not holding these many shorts on the Index. Needless to say, FIIs are Bearish.
Globally, India posted the worst performance. Most Asian & European markets ended in the red. But, the US is trading in green now as I am writing this.
Only 5 out of the 50 Nifty Stocks ended in green. Index heavyweights Reliance and HDFC Bank alone took away 100 points from Nifty.
All sectors ended in red.
Even if you look at the F&O stocks 95% of them witnessed short buildup or long unwinding. Bearish signs.
With respect to open interest for the current week's expiry, PUTs were closed at 17000 and a huge amount of CALLs were added. Not just in this week’s expiry, CALLs were added in the next week's expiry and also in the monthly expiry. 17000 will now be a resistance.
Just in - Fed has hiked the rate by 50 basis points to fight inflation. This was already expected. US markets reacting positively to the news. So, the day started with RBI announcement and ends with FED announcement. Both Central Banks hiking rates to arrest inflation.
Let’s now move on to the price action.
Positional Trading Analysis for this week (May 02 to 06, 2022)
Today the third target for the week (16635) was almost touched on the downside. So I have added the next support level below 16635 which is 16454.
Bullish only if the Nifty Futures closes above 17435 in the Daily Chart. Resistance on the upside being 17658, 17812, 17991. (Marked in Red).
Bearish as long as Nifty Futures closes below 17230 in the Daily Chart. Support on the downside being 17040, 16844, 16635, 16454 (Marked in Green).
We will maintain a Neutral view if Nifty Futures trades between 17230 & 17435 (between the Blue levels).
The above analysis is for Positional Trading (1 Day Chart). For Intraday Analysis (5 minutes Chart) of Nifty, Banknifty & Stocks, and other useful tools, please check the Finvezto Toolkit. Toolkit enables independent research and helps you make wise trading & investing decisions.
Disclaimer: The analysis is for educational & informational purposes only. Please consult your financial advisor before taking any trading/investing decisions.