Stock markets ahead: Short-term buying rally seen on weekly chart

The index is still struggling to get the support of the 50 Simple Moving Average in daily charts

Sumeet BagadiaUpdated: Saturday, May 21, 2022, 02:48 PM IST
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Sector-wise, Nifty Metal saw the highest gains of 7.40 percent followed by the Realty and Auto added over 4 percent gain. /Representative image |

India’s benchmark index Nifty is indicating a short-term buying rally as the index has formed a Tweezer Bottom type pattern on the weekly chart that may drive the market till the monthly expiry.

On the daily chart too, stock prices have rebounded from the lower Bollinger band while momentum indicators MACD and Stochastic were trading with a positive crossover & reversed from oversold zone.

However, the index is still struggling to get the support of the 50 Simple Moving Average in daily charts and hence short-term investors and traders are advised to work with option strategies to neutralize the volatility.

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

This week, the market ended on a positive note after five consecutive weeks of losses, though it remained largely volatile based on global cues.

Despite being on a subdued note, markets saw sharp short-covering during the mid-week, but these gains were not sustained as worries over inflation and economic slowdown weighted investor sentiments on Thursday.

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

Sector-wise, Nifty Metal saw the highest gains of 7.40 percent followed by the Realty and Auto added over 4 percent gain, while on the flip side Nifty IT tumbled 2.82 percent on a weekly basis.

INDIA VIX, that measures volatility, closed at 23.10 suggesting the element of volatility to remain intact.

Top gainers

Eicher Motors: Eicher Motors' share price surged post impressive Q4 result.

Hindalco: Hindalco's share price rose amid China's demand revival hopes.

ITC: ITC share price surged after the strong Q4 results and exceeded the analyst's expectation.

Top losers

IOCL: IOCL stock price plunged as record refining margins were wiped away because of a margin squeeze in petrochemicals and losses on auto fuel sales.

Tech Mahindra, TCS, Infosys: Stocks in the IT sector witnessed a heavy sell-off amid recession concerns.

(Sumeet Bagadia is Executive Director, Choice Broking)

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