Short-term buying rally seen on the weekly chart

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India’s benchmark Nifty index is signaling a resumption of short-term buying as the index has formed a Tweezer Bottom-like pattern on the weekly chart that may lead the market into the monthly expiry.

Also on the daily chart, stock prices rebounded from the lower Bollinger band while the momentum indicators MACD and Stochastic traded with a positive cross and inverted from the oversold zone.

However, the index is still struggling to gain support from the 50 simple moving average in the daily charts and so investors and short-term traders are advised to work with options strategies to neutralize volatility.

Overall, Nifty has support at 15,700, while on the upside 16,700 followed by 16,500 may act as immediate resistance. While Bank Nifty has support around 32,500 while resistance is placed at 36,000 on the weekly chart.

This week the market ended on a positive note after five straight weeks of losses, although it remained largely volatile based on global indices.

Despite a moderate rating, markets saw heavy short coverage mid-week, but those gains were not sustained as worries about inflation and the economic slowdown weighed on investor sentiment on Thursday.

Nifty managed to stop above 16,000 levels to overcome the dominance of the bears and end the week with a gain of 3.07% or 484 points.

Sector-wise, Nifty Metal posted the highest gains of 7.40%, followed by Real Estate and Autos, which added more than 4% gain, while on the other hand, Nifty IT fell 2.82% on a weekly basis.

INDIA VIX, which measures volatility, closed at 11:10 p.m., suggesting that the volatility element remains intact.

Top Winners

Eicher engines: Eicher Motors stock price surged after an impressive fourth quarter result.

Hindalco: Hindalco’s share price rose amid hopes of a boost in Chinese demand.

CCI: ITC’s stock price surged after strong fourth-quarter results and beat analyst expectations.

Main losers

IOCL: IOCL’s share price plunged as record refining margins were erased due to margin compression in petrochemicals and losses on automotive fuel sales.

Tech Mahindra, TCS, Infosys: IT stocks sold off amid recession fears.

(Sumeet Bagadia is Executive Director, Choice Broking)

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Posted: Saturday, May 21, 2022, 2:48 PM IST

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