6th May' 2022 (Evening)

6th May' 2022 (Evening)  --  | Written on 8th May at 11.00 PM |

  • After the steep fall in US on Thu night, our markets opened to extremely weak cues, though the aggressive buying by the DII provided support to the markets and did not allow a further fall through the day.
  • Markets however traded in a shallow range, with Nifty trading in a range of 144 points and Bank Nifty in a range of 444 points. After the opening, I expected a steep fall from there but the DII buying absorbed most of the selling by FII. 
  • Lets look at the levels before we discuss further :
  • The markets on Friday though did not fall after the opening, they also could not recover from there. A few failed attempts were visible indicating lack of conviction in the bulls.
  • Both Nifty and Bank Nifty breached and closed below some critical levels as shown in the notes on Thu. While Nifty closed just below 16425, Bank Nifty closed much below 35000. The next important levels from here now, are much lower. Nifty is now staring at 15650 before some support at 16150 and Bank Nifty is now staring at 32150 with some support at 34100 before that. 
  • So how do we look at all this data points. I would look at the Friday lows as the first level to watch. Some fresh shorting can be initiated if the indices start taking down these levels. These are 16325 for Nifty and 34350 for Bank Nifty.
  • All important markets globally closed in red on Friday. Europe closed around 1.75% down and US Nasdaq closed 1.5% down. Dow was relatively a bit resilient to have lost just 0.3%.
  • As mentioned earlier, Dow and Nasdaq have moved closer to 32300 and 12600, the critical levels I mentioned. These levels are extremely important to be held, else we see a much severe and deeper pain in the markets.
  • FII on Friday sold for 5000Cr plus and DII absorbed 3000Cr out of this. On the FnO side, FII were extremely bearish, having shorted 27753 contracts on Index futures and unwinding 2000 Contracts. They also sold more Puts than calls. 
  • Options OI indicate heavy resistance at 16700 and some minor support at 16400 also for Bank Nifty, heavy resistance seen at 35000 and some  support at 34500 levels. I still see weakness and some more pain. Lets see if the indices give some pull back tomorrow.
  • The Dollar Index at 103.68 and US 10 Y yields at 3.142% pose a strong headwind for the global equity markets. Oil at 113 continues to haunt the markets.
  • The expectations of some more aggressive rate hikes may keep the bulls in their dugs for some time.
  • Watch for these global event this week :- Tue - Economic sentiment from Europe, Wed : ECB president commentary and Core CPI from US Thu : British GDP and jobs data from US. Also PPI data from US.
  • Wish you a happy trading week ahead....

1. FII were net sellers for 5517 Cr today, while DII were Buyers for 3014 Cr. A net selling of 2503 Cr from the institutional side.

2. FII's unwound 2112 longs and created 27753 shorts on the index futures

3. On the option front FII  created 92844 short calls and   created 63021 short puts. They also created 92133 long calls and  created 122965 long Puts.

4. For next week expiry, Nifty has the highest OI for PE at 16000 followed by 16400 and highest OI for CE is at 17000 followed by 16700. Highest Put writing was seen at 16400 and highest call writing was seen at 16700 levels.

5. For the next week expiry, Bank Nifty has the highest OI for PE at 34000 followed by 34500 and highest OI for CE is at 36000 followed by 35500. Highest Put writing was seen at 34500 and highest call writing was seen at 35000 levels. 

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

7. US markets closed in red as well

8. The breadth of the market was extremely weak on Friday

9. Nifty opened at 16415 and made an intra day high of 16484 and a low of 16340 before closing at 16411 .The range of Nifty for the day was 144 points.

10. Bank Nifty opened at 34569 and made an intra day high of 34797 and a low of 34353 before closing at 34591 .The range of Nifty for the day was 444 points.

11. US Dollar Index is at 103.680

12. Led by Metals and IT, except energy, all sectors closed in red

13. India VIX increased to 21.2500

14. US 10Y yields are at 3.142

15. Nifty futures saw short buildup

16. Bank Nifty futures saw short buildup

17. US Brent oil eased to 113.22

18. USD / INR eased to 76.954


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