NIFTY WEEKLY OUTLOOK & MAY EXPIRY TRADING TIPS 22 JUL TO 26 JUL 2019

WEEKLY RESISTANCE FOR NIFTY: 11475, 11575, 11675

 PIVOT POINT: 11400

WEEKLY SUPPORT FOR NIFTY:  11325, 11275, 11200

WEEKLY CHART FOR NIFTY

DAILY RESISTANCE FOR NIFTY: 11450, 11550, 11650

PIVOT POINT:11425

DAILY SUPPORT FOR NIFTY :  11375,11350,11300

DAILY CHART FOR NIFTY

The week closed on negative note. The Sensex slips 560 pts to log 2nd biggest fall in 2019 so far, Nifty ends at 11419. The Nifty hinted at a positive opening of the week and in line with the expectations, our markets started trading for the week on a positive note above the 11600 mark. The index then consolidated in a range throughout the session and ended the day tad below 11600. The index heavyweight ‘Infosys’ announced its quarterly results over the weekend and the market participants gave thumbs up to its better than expected numbers.  Nifty opened on a flat note on Tuesday and consolidated below the resistance of 11640 for most part of the session. However, Nifty breached this resistance during later part of the session and ended the day around the high point with gains of over six-tenths of a percent.  The index opened marginally positive in Wednesday’s trading session and traded in a narrow range throughout the day to end tad below the 11700 mark. In last few sessions, Nifty has seen a pullback move and has tested its '20 DEMA' in Wednesday’s session. Although the index has given a pullback moves of more than 200 points from the recent lows. Most of the Asian markets were trading with a flat to negative bias before our market open and our indices too witnessed a flat opening in Thursday’s session. However, the weekly expiry session witnessed a negative momentum from the opening ticks itself and the index corrected throughout the session to end the day around 11600. On Friday market slid as there was sharp sell-off by foreign funds due to the government’s reluctance to tweak FPIs income tax surcharge, and the deficiency in monsoon rain, which impacted risk sentiment. Additionally, downward revision in India’s growth to 7% by ADB and lackluster earnings from domestic corporates added anxiety over premium valuation.  
NIFTY: A STRONG SUPPORT WILL BE @ 11350; STRONG RESISTANCE LEVEL SEEN @11600

Next week is the expiry week on Jul series, honestly at this juncture; it’s hard to give any possible direction for the forthcoming week. We need to see how market reacts in the first half. Till the time, 11425-11400 are not violated, the broader structure does not get distorted. But in case if it happens, then get ready for some sharper cuts in the market. On the higher side, 11640-11700 remains to be a sturdy wall. If market has to regain strength, the banking needs to take a charge. Also the IT and Midcaps witnessed complete sell off and hence, we need to see whether the correction is overdone or yet to extend further. At present, traders are advised to stay light and it’s better to adopt a confirmatory approach for a while.

TECHNICALLY SPEAKING.

Lackluster earnings from domestic corporate added anxiety over premium valuation, market participants looked disappointed, which triggered this massive sell off, especially in some of the marquee outperformers. To make it worse, we had a heady  gap down on Friday which accelerated as the day progressed. Eventually Friday’s session turned out to be the weakest day of the current calendar year.  Last week’s low of 11399 holds lot of significance because it coincides with multiple technical evidences such as, (i) 61.8% retracement of recent rally (11108 – 12103), (ii) Trend line joining previous lows and (iii) The vicinity of the bullish gap formed after exit poll numbers. For a time being, market has respected this crucial junction but going ahead, it would be important to see how index behaves around it. In case of a breakdown below 11460 – 11430, the selloff is likely to escalate to test lower levels 11250 - 11230 or even a move towards May lows (11108) cannot be ruled out. So till the time we are above it, there is still a final ray of hope for the bulls. However, on the upside, previous support of 11650 is now acting as a sturdy wall. Hence, if index has to regain any strength, it needs to convincingly surpass this hurdle of 11650 - 11700. For a time being, 11375 – 11300 would be seen as a crucial range for the index. At present, traders are advised to stay light and avoid taking any undue risks. As mentioned in the above section, any existing longs should be exited if index breaches key support of 11350 – 11300 convincingly. . So if market manages to hold its support, we would see sharp pull backs in these names. Also, midcap index had an encouraging move despite the benchmark tumbled in the final hour. Do watch out for this universe as well. The Nifty has consolidated in a range since last few sessions in which the earlier support of 11670 has been acting as a resistance now. Hence, the index needs to convincingly surpass the hurdle of 11640-11700 to regain any strength. On the flipside, 11400-11325 is the immediate support range to watch out for. From a near term perspective, the index is locked in a range which could be termed as a time-wise correction and until we see a breakout in either direction, traders should focus on a stock specific approach. From a near term perspective, if the index manages to sustain above the 11640 mark, then it could continue this pullback move towards the recent gap area of 11695-11750 which also coincides with the 61.8% retracement of the recent corrective move. On the flipside, the immediate support is placed around 11350. Traders are advised to continue to trade with a stock specific approach and trade with a proper risk management strategy.