Market Analysis for May 25, 2022

Post Market Report & Nifty Chart Analysis

1. Today the Nifty Futures was quite volatile. It was trading above and below the open throughout the day without any clear direction. Finally, it closed lower at 16126 below the open. Even yesterday, after shooting upward initially, the price closed below the open. Bears are in control in the Intraday Timeframe.

   

   Nifty Futures - 5 minutes chart - Today’s price action

2. India VIX was up by 9% in the morning even before the first hour. The price was still trading around the open at that time.

3. On top of it, PUTs were trading at a higher premium than CALLs. There was a significant skew. I sold 16600 CALL which was 400 points away from the spot and also sold 15600 PUTs which were 600 points away from the spot. Both were trading at almost the same premium.

   

4. Clearly, there was an aggressive demand for options. Both IndiaVIX and the skew indicate that.

5. Most sectors were down today. IT, Metals & Media continue to fall. Banks and Auto managed to end in green.

   

6. HDFC Twins were up.

7. Here are a few stocks that did well today and also in higher timeframes.

   

8. Institutional Activity along with an upmove was observed in Nestle & HDFC Life.

9. FIIs sold for ₹2393 Crores and DIIs bought for ₹1948 Crores in the cash market.

10. FIIs have reduced their short positions on the Index and increased their long positions on Stock Derivatives. FIIs are becoming less bearish.

11. On the other hand, the US markets are keeping traders on their toes. Up one day, down the other day. Nasdaq is down 3%. Dow is down 1%. But there is some recovery happening as I am writing this.

    

12. With respect to Nifty Open Interest, more CALLs were added between 16000 and 16500 indicating a negative outlook. On the PUTs side, 16000 still has the highest open interest. More PUTs were added at 16000 too. Participants are expecting Nifty to take support at 16000.

13. SGX Nifty is around 16080.

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

Positional Trading Analysis for this week (May 23 to 27, 2022)

• Bullish only if Nifty Futures closes above 16249 in the Daily Chart. Resistance on the upside being 16350, 16451, 16646. (Marked in Red).

• Bearish only if Nifty Futures closes below 16093 in the Daily Chart. Support on the downside being 15984, 15887, 15734. (Marked in Green).

• We will maintain a Neutral view if Nifty Futures trades between 16093 and 16249. (between the Blue levels).

Please read this article to know more about Key levels.

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