NIFTY WEEKLY OUTLOOK & OPTION CALL PUT TIPS FOR 15 MAY TO 19 MAY 2023

WEEKLY RESISTANCE FOR NIFTY: 18350, 18450, 18550

PIVOT POINT: 18250

WEEKLY SUPPORT FOR NIFTY:  18150, 18050, 17950

WEEKLY CHART FOR NIFTY

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The Nifty50 had a strong day as it remained higher throughout the May 8 session. The index recouped all of its Friday losses to close at a new 2023 high, driven by banking and financial services, auto, FMCG, technology and metals stocks. The index opened higher at 18121 and extended gains later in the day, reaching 18287 later in the session. Finally, the index jumped 195 points, to 18264. The domestic market pared gains as weak global sentiment prevailed. The forthcoming US inflation figures have become the focal point in determining global market developments. US inflation, which is expected to remain unchanged at the March level of 5.0 percent, worries that the Fed will remain tighter for much longer. However, continued support from FIIs protects the domestic market from a sharp correction. Markets moved mostly in line with global equities, which were sluggish to negative. After showing some volatility early in the session, markets remained in negative territory for most of the trading session, ending almost flat as investors resorted to selective profit taking after the sharp rise seen in recent sessions. The sharp appreciation of the rupee could indicate that foreign investors could sell local stocks if the trend continues. The Sensex was down 2 points or flat at 61761 and the Nifty closed 5 points lower at 18259. Benchmark Sensex closed 179 points higher while Nifty closed above 18300 on high volatility. The Sensex was up 178 points, to 61940 and the Nifty was up 45 points, to 18311. The benchmarks saw significant volatility throughout the day, characterized by an initial price gap to the upside, followed by a significant sell-off in the first half of the trading session, eventually culminating in a rebound towards the end of the day. The Nifty50 has been trading ranged above the previous day's high, but failed to hold it due to selling pressure in the last hour of trading on May 11, the weekly F&O expiration day, while volatility grew higher by the day. The index opened higher at 18,358 and climbed to 18,390 on the day amid volatility after US inflation numbers eased, but gave up all gains in the last hour of trading to finish down 18 points at 18297. Friday market  ended up 17 points at 18314. A slew of weak economic data points from the US and China hinting towards a slower pace of economic growth disturbed the mood of the Asian market. Consequently, US Treasury yields reacted, indicating a potential halt in central bank rate hikes. The domestic market recovered in the second half as investors back home awaited the release of Indian inflation data that is expected to cool down below 5%.

NIFTY: STRONG SUPPORT& STRONG RESISTANCE LEVEL

Technically, Nifty is trading comfortably above the 10-day SMA (Simple Moving Average) after a strong uptrend rally and is also maintaining a higher bottom formation that supports further uptrend from the current levels. On the weekly charts, the index has formed a long bullish candle, indicating the continuation of the uptrend. As long as the index trades above the 10-day SMA or 18200, the positive sentiment will continue. Above 18200 the index will likely move to 18450-18550. On the other hand, bulls may prefer to exit the long positions if the index trades below 18,200 and further downtrend could slip to 18,000.

 TECHNICALLY SPEAKING

Nifty formed a small green candlestick with a long lower shadow today, suggesting that buying is visible in the lower zones. On the weekly scale, a long bull candle formed with a small upper shadow to negate last week's bearish pattern. Now, Nifty needs to continue holding above the 18250 zones to see an upside move towards the 18400 and 18442 zones while on the downside there are supports at the 18181 and 18081 levels. India's VIX fell 2.78% to 12.85 from 13.22. Volatility has come down after rising for the past five sessions, giving bulls comfort in a buy-on-fall stance in the market. Options data suggests a broader range between the 17900 and 18500 zones and an immediate range between the 18150 and 18450 zones. The Relative Strength Index (RSI) showed a bullish crossover, indicating possible bullish momentum in the market. For the monthly expiration in May, the range remains between 18,000 and 18,500 and it will not be easy for the index to stay above the 18,500 level. There needs to be a decisive break above 18550 for this level to be breached. Also for this week the buy structure on dips remains in place and any drop below 18200-18000 should be viewed as a buying opportunity.