Nifty Today Outlook Report - 16th May, 2022

Nifty witnessed a positive start on the last trading session of the week which provided some hopes of the much awaited pullback rally. However, the selling resumed in the later part of the day and Nifty gave up all the morning gains to end marginally negative.
 

The bears had a complete grip on the markets throughout the week as the minor pullbacks got sold into and Nifty lost almost 4 percent during the week and ended below 15800. The short term trend for the index continues to be negative and although the momentum readings are oversold, we are not witnessing any significant pullbacks. In strong corrective phases, we usually see such moves where momentum readings can remain oversold until the prices complete their corrective phase.

Nifty Today:
 

In the F & O segment too, most of the positions built by the FIIs are on the short side and their ‘Long Short Ratio’ in the index futures segment is at its lowest which is not seen since quite some time. The sectoral indices too have not yet shown any signs of reversal or bottoming out. The immediate support for Nifty is now placed around the early March low of 15670 below which 15450-15500 will be on cards. On pullback moves, the index once again resisted around the hourly ’20 EMA’ which is now at 16000 mark. A move above 16000-16075 is now required for any price wise pullback move in the coming week. Thus, until we see any change in the chart structure, we continue to advise traders to stay cautious.

The Banking index showed some relative strength at the start of the week but ultimately it resumed the downtrend on the weekly expiry day and the day after. Thus, the trend here too remains negative and since there’s no divergence seen yet, one should not be in a hurry to bottom-fish.