Weekly Market Analysis for May 30 - Jun 03, 2022

1. In the last 2 days, Nifty Futures has gone from 15900 to 16350. Almost 450 points. 2 Bullish Hammers back to back. In the process, it has also managed to comfortable close above 16250. It has also formed higher lows in the daily chart. All of this points towards a recovery. However, the 16350 to 16400 zone has remained a barrier over the last couple of weeks.

   

   Nifty Futures - 1 Day Chart

2. We also had a look at the US markets, especially the S&P 500 Index. It has formed a double bottom and the price has closed above the neckline indicating bullishness.

   

3. Most Global markets witnessed a recovery during the last 2 days. Overall most markets ended last week in green except the Japanese Nikkei.

   

4. Overall positive global cues.

5. The latest US Inflation data was released on Friday and it has slowed down to 6.3% from 6.6% the previous month. It does seem to have cheered up the US market on Friday.

6. Now, this doesn’t mean that the rate hikes are going away. Both the RBI and the FED have clearly indicated that more rate hikes are on course.

7. The Government has also been playing its cards to bring down the rising domestic prices. It has cut fuel prices recently, imposed an export duty on Iron Ore, reduced import duty on coal, and curbed exports of Sugar, Wheat, etc. Some coordinated action by the Government and the RBI.

8. Steel and Sugar stocks plunged last week owing to the above regulations. Sectors such as Auto & Realty are set to benefit from these.

9. The rupee has also weakened in recent times with respect to the Dollar. May 2021 => $1= ₹72.4. May 2022 => $1 = ₹77.6. This would increase the input costs of those companies importing raw materials. On the other hand, it is good for companies involved in Exports.

10. Banks, Financial Services and Auto were the best performing indices last week.

    

11. FIIs sold for ₹1943 Crores on Friday in the cash market. However, they are continually reducing their short positions on Index Derivatives and increasing their long positions on Stock Derivatives. They are becoming less bearish.

12. With respect to the Nifty Open Interest of the coming week, we see that participants have built straddles around 16300 and the straddle is trading around ₹330. So, the market participants are expecting Nifty to trade between 16000 to 16600 with respect to the upcoming expiry.

13. Shanghai is gradually opening up after the recent COVID Lockdown.

14. SGX Nifty is above 16400.

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

Positional Trading Analysis for this week (May 30 to June 03, 2022)

• Bullish if Nifty Futures closes above 16350 in the Daily Chart. Resistance on the upside being 16451, 16646, 16846. (Marked in Red).

• Bearish if Nifty Futures closes below 16249 in the Daily Chart. Support on the downside being 16093, 15984, 15887. (Marked in Green).

• We will maintain a Neutral view if Nifty Futures trades between 16249 and 16350. (between the Blue 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.