Market Analysis for May 16, 2022

Weekly Market Report & Nifty Chart Analysis

1. Nifty Futures fell almost 650 points last week. It tested the previous low around 15700 and closed at 15786.

   

   Nifty Futures - 1 Day Chart

2. A quick recap of events over the last couple of weeks - Retail Inflation is at an 8 year high, Passenger vehicle sales dip in April, India GDP forecast cut by Morgan Stanley, Rate hikes in US & India, FII selling spree, INR₹ at an all-time low compared to USD…I will stop here. I don’t want to spoil the Sunday Evening vibes.

3. Hey, but there is some good news too. Global markets rebounded on Friday. SGX Nifty is up.

   

4. We are only 5 months into 2022 and FIIs have already sold ₹2.03 Lac Crores which is more than double of what they sold in 2021. DIIs have bought for ₹1.6 Lac Crores in 2022 so far.

   

   Source: Finvezto Toolkit

5. The following is a very important chart. As FIIs have been on a selling spree, they have majorly held short positions in the Index Derivatives segment and long positions in the Stock Derivatives segment. You can see quite clearly that when they are ready to sell heavily, they load up short positions on the Index. Also, as the price falls, they keep increasing their short positions.

   

   Source: Finvezto Toolkit

6. Although FIIs have reduced their short positions on the Index on Friday, they are still short overall.

7. All sectors except FMCG ended in red last week. Metals, Energy & PSU Banks were the worst hit. RBI has announced that the frauds in PSU Banks have halved over the last year. Will this statement save PSU Banks this week?

   

8. Amidst the carnage last week, these are the stocks that did well.

   

9. Adani Group Stocks tanked last week.

   

10. Adani Power alone was up after its inclusion in the MSCI Index. Tata Elxsi was also up significantly. The changes will be effective May 31, 2022.

11. ITC, Airtel, IOC, Pidilite, and Dr. Reddys will be announcing their quarterly results this week.

12. LIC IPO to list on Tuesday.

13. WPI Inflation data will also be released on the same day. With Retail Inflation at an 8-year high, it will be interesting to see the Wholesale Inflation trend.

Let’s now move on to the charts & price action.

Positional Trading Analysis for this week (May 16 to 20, 2022)

• Bullish only if the Nifty Futures closes above 15930 in the Daily Chart. Resistance on the upside being 16034, 16159, 16234. (Marked in Red).

• Bearish if Nifty Futures closes below 15734 in the Daily Chart. Support on the downside being 15516, 15415, 15266. (Marked in Green).

• We will maintain a Neutral view if Nifty Futures trades between 15734 & 15930 (between the Blue levels).

Please read this article to know more about Key levels.

Disclaimer: The analysis is for educational & informational purposes only. Please consult your financial advisor before taking any trading/investing decisions.