Market Analysis for May 06, 2022

Post Market Report & Nifty Chart Analysis

1. Today Nifty Futures opened 120 points higher and was racing away towards 17000. It reached a high of 16980 in the first hour itself. Yesterday we had mentioned that 17000 has turned into resistance as we witnessed a huge CALL buildup yesterday at 17000 across expiries. Selling came in near 17000 levels and price was pushed down back to the open. In the second half of the day the open price was also broken and Nifty Futures fell 300 points from the day’s highs to close at 16680.

   

   Nifty Futures - 5 minutes Chart - Today’s Price Action

2. As a thumb rule, if the price is trading below the Open we consider the market to be bearish in the Intraday Timeframe. Today was an example where the Bulls were controlling the first half and the Bears came in aggressively during the second half to push the close lower. Why do we focus so much on the Closing price? Please let me know your answer in the comments section.

3. So, the Bears regained control in the Intraday Timeframe (Lower Timeframe). Let us move on to the Daily Timeframe (Higher Timeframe). Price is still below the key level of 17230 with respect to the Daily Chart. Hence, the Bears are in control in the higher timeframe as well.

   

   Nifty Futures - Daily Chart

4. IT Stocks were up and were the top contributors to Nifty today ensuring Nifty closed in green.

   

5. Reliance is coming back down at the same pace with which it went up. It was at 2850 a few days back. Now, it has shed 200+ points and is back to 2643.

   

6. Here are some stocks that did well today and have been doing well across timeframes.

   

7. European markets were trading in green in the first half. But they are now trading in the red. The US is in deep red. Nasdaq is down 4% and DOW is down almost 3%. Most Asian markets are in red. Global Cues are negative.

   

8. FIIs sold for 2074 Crores and DIIs bought for 2229 Crores in the Cash Market. After selling ₹44000 Crores in April, FIIs continue their selling spree in May.

9. FIIs have reduced their short positions on the Index today (it could be because of the weekly expiry). However, they still hold significant short positions on the Index.

Let’s now move on to the price action.

Positional Trading Analysis for this week (May 02 to 06, 2022)

• 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).

• Bullish only if the Nifty Futures closes above 17435 in the Daily Chart. Resistance on the upside being 17658, 17812, 17991. (Marked in Red).

• 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 this week only. 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.