20th May' 2022 (Evening)

20th May' 2022 (Evening)  --  | Written on 22nd May' 2022 at 9.00 PM  |

  • Indices on Friday showed a sharp recovery from the previous lows and a gap up opening on Friday. I mentioned that above 16000 the indices could be strong and they opened above these levels, triggering a sharp short covering and helped elevate the indices higher.
  • Though the indices are yet to be tested at higher levels of 16400, an intraday dip was bought out, raising hopes of a pull back. Now the indices are again sitting at very interesting levels.
  • So both Nifty and Bank Nifty made inside candles on a daily chart. Over the last week, the levels have been like this. The markets open with a gap up or a gap down and then drift in the same direction for some time, making the markets extremely difficult to trade. The current range of the markets and limits created are  15750-16400. 
  • I feel that this range is now imminent to be broken. The million dollar question is which side? :-) While a slight pull back may be seen, the markets are yet to achieve the levels i have been mentioning. I have posted a separate thread on this, please do refer that. I feel any reversal if happens without breaching the march lows, will be vulnerable to get sold off at some level. We should see a low of below 15000 before making a sustainable pull back rally.
  • lets look at the levels now :
  • The current levels are closer to the resistance of 16400, this level is important to be breached for a short term pull back. If rejected again from here, on the lower side, 16100 will be the first level to watch and then 15775. On the other side, if 16400 is taken down, we may see a sharp short covering. 
  • Being the last week of the May series, expect the volatility to continue if not increase. The trading range of the market would be wider. 
  • FII sold for 1265Cr on Friday, however, the DII bought for 2148 Cr and supported the indices. On the futures side the FII created more than 11000 long contracts and also unwound 20000 plus short contracts on Index futures. They also created a large number of contracts on Stock futures and unwound a large number of shorts. They also shorted a large number of puts and bought calls.
  • So the stance from them on the FnO side was extremely bullish. This if continued could provide the impetus for a short term pull back. The duty reductions announced by the government could have been a reason for this. However, this probably has been priced in fully now and we will again probably look at the global cues tomorrow for our direction.
  • On the options front, there seems to be support at 16000 and 34000 for Nifty and Bank Nifty respectively. The large put writing on Friday may provide some base to our markets, however, a possibility of a failed attempt to breach 16400 may kick a sharp reaction.
  • Globally, the indices are at interesting levels and i recommend a read of the thread i tweeted on this.
  • Some important events this week - 
    • Mon - German business climate Index and Bank of England Governor speech, 
    • Tue - German PMI, British PMI data and FED commentary. ECB president speech
    • Wed - German GDP and FOMC minutes
    • Thu - US GDP and US jobless claims
  • Wish you a happy trading week ahead....

1. FII were net sellers for 1265 Cr today, while DII were Buyers for 2148 Cr. A net Buying of 883 Cr from the institutional side.

2. FII's created 17198 longs and unwound 19811 shorts on the index futures

3. On the option front FII  created 11602 short calls and   created 70998 short puts. They also created 93833 long calls and  created 50792 long Puts.

4. For next week expiry, Nifty has the highest OI for PE at 16000 followed by 15800 and highest OI for CE is at 17000 followed by 16300. Highest Put writing was seen at 16000 and highest call writing was seen at 16300 levels.

5. For the next week expiry, Bank Nifty has the highest OI for PE at 34000 followed by 33000 and highest OI for CE is at 36000 followed by 35000. Highest Put writing was seen at 34000 and highest call writing was seen at 34700 and above levels. 

6. Asian markets closed mostly in green and Europe also closed in green

7. US markets closed flat on Friday

8. The breadth of the market was extremely strong today

9. Nifty opened at 16043 and made an intra day high of 16283 and a low of 16003 before closing at 16266 .The range of Nifty for the day was 280 points.

10. Bank Nifty opened at 33765 and made an intra day high of 34358 and a low of 33658 before closing at 34276 .The range of Bank Nifty for the day was 700 points.

11. US Dollar Index is at 103.015

12. Led by metals, Pharma and Auto all sectors closed in green

13. India VIX eased to 23.1

14. US 10Y yields are at 2.788

15. Nifty futures saw short covering

16. Bank Nifty futures saw short covering

17. US Brent oil eased to 112.91

18. USD / INR increased to 77.819


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