Nifty Today Outlook Report - 27th May, 2022

Nifty started the F&O expiry day on a positive note above 16100. But the index started correcting from the opening ticks and almost tested 15900 before noon. However, the index then took a u-turn and rallied sharply for the rest of the session to end at 16170 with gains of almost a percent.

Nifty breached the 16000 mark in the morning trade and the broader markets too witnessed selling pressure in initial couple of hours. But the banking index continued to show a relative outperformance and was reluctant to fall along with the benchmark. This created a divergence amongst both indices and as the Bank Nifty surpassed its hurdle to 34800, we witnessed a good buying interest in the banking stocks and then other stocks too recovered smartly from their lows.

Nifty Today:

The Nifty index is still trading within the broad range which has been seen recently but the banking index has given a breakout above its crucial hurdles. Other index such as Midcap 100 and Metal index recovered from their respective supports on the daily charts. This is indicates that the markets could see a broad based recovery in the near term with leadership coming from the banking stocks. A follow up move above 16200 in the coming session could lead the index towards its ’20 DEMA’ which is at 16330 and above that it could continue the momentum towards the recent gap area of 16480-16650. Since we have a higher bottom formation on the hourly charts at low of 15900, this will be seen as a crucial support now. 

Short term traders can look for stock specific buying opportunities from a near term perspective as many stocks which have recently seen sharp correction have oversold momentum readings, and a recovery in the indices could lead to a decent recovery in such stocks.