Dalal Street Week Ahead: Nifty Analysis For May First Week

LAST WEEK

NIFTY opened the week with a small gap-up at 17,709 on Monday. The index took support at the major level of 17,620 and started rallying.  It was a perfect up-trending week. 17,800 was crossed on Thursday and the index took less time to move another 200 points. 18,000 was crossed on Friday and NIFTY ended the week at 18,065, up by 441 points or 2.5%.

BANK NIFTY opened with a gap-up at 42,365 and moved higher. The zone around 42,800 posed resistance to the index. BNF moved down to 42,500 and then rallied. The close was at 43,000 on the expiry day and BNF had a green day on Friday. The index ended the week at 43,234, up by 1116 points or 2.65%.

FIN NIFTY opened with a gap-up at 18,912, took support at 18,840 and moved up on Monday. 19,045 was the challenge for the week and the index failed to break it on Tuesday. There was a sizeable fall but FIN NIFTY caught up on Wednesday and consolidated at the resistance on Thursday. The index broke out on Thursday but the opening was weak on the last day of the week. Support was taken at 18,980 and a big up-move followed to end the week at 19,163, up by 409 points or 2.18%.

IT moved up by 3.3%.

Foreign Institutional Investors net-bought shares worth Rs 5,000 crores last week.

Domestic Institutional Investors net-bought shares worth Rs 2,000 crores.

Both FIIs and DIIs were net buyers last week. The major share came on Friday.

The US markets had a green week. The European markets had a mixed week with DAX closing slightly in the green and FTSE in the red. Dow Jones fell in the first half of the week and recovered well in the second half. There was fear among participants regarding weaker results. However, the results were above the estimates. This led to the recovery we saw. 

The concern now is Republic Bank shares falling heavily. There was a fall of more than 40% on Friday and the bank is now trading with just 3% of its share value in January!

The Asian markets also had a mixed week. Looking at NIKKEI, the index saw a 1% up-move last week.

It was not a week with major data releases. US Quarterly GDP figure showed that there was slower growth.

SGX Nifty is at 18,207.

INDIA VIX dropped below 11 to 10.9.

WEEK AHEAD

NIFTY has supports at 18,000, 17,955 and 17,885. We can expect resistances at 18,135, 18,200 and 18,225.

BANK NIFTY has supports at 43,000, 42,850 and 42,600.  Resistances are at 43,265, 43,500 and 43,680.

FIN.NIFTY has supports at 19,100, 19,045 and 18,975. We can expect resistances at 19,200, 19,285 and 19,320.

NIFTY has the highest call OI build-up at 18,000. The highest put OI build-up also is at 18,000.

BANK NIFTY has the highest call OI build-up at 43,000. The highest put OI build-up also is at 43,000.

FIN NIFTY has the highest call OI build-up at 19,250. The highest put OI build-up is at 19,000.

The weekly candle is a strong green candle. As we discussed last week, the pull-back we saw was completely fine for another round by bulls as the retracement move was less than 30% of the rally we had. There is a bullish sandwich formation in the weekly chart now. 

Almost all the major resistance points in the weekly chart have been broken. 18,110 is the next level to watch for the weekly close. A consolidation somewhere above the level and another breakout can take NIFTY to all-time high.

The last week’s move boosted the confidence of the bulls by reversing the long down-trend. The pace is a bit alarming looking at the possibility of a fierce down-move. But considering the point that the major levels have been broken on the upside, we can say that the market is in favour of long-players. 

Major events of the week are as follows:

MONDAY
Holiday for global markets except for Wall Street

Maharashtra day: Holiday

US PMI

India Manufacturing PMI

TUESDAY
Euro CPI

WEDNESDAY
Fed interest rate decision

THURSDAY
ECB Interest rate decision 

We can focus on Fed interest rate decision. Will there be a pause or hike is the question. The probability is for another hike and it could be the last hike in the cycle. There have been nine hikes recently. Note that there is fear of recession as well.

Tata Steel, Titan, Hero MotoCorp and HDFC will announce their results next week.

Auto Sales data also will be released.

Kotak Bank results were better than estimates. HDFC results will be out tomorrow. If that too comes out positive, it can be a follow-up candle.

I will watch 18,000 on the downside in NIFTY. 18,135 can be watched on the upside.

Let us know your expectations for the week in the comments section!