Rally After Gap-Up? Pre Market Analysis

Here are some of the major updates that could move the markets today:

Stocks

The Reserve Bank of India has imposed monetary penalty on Indian Overseas Bank for non-compliance of income recognition and other deficiencies in regulatory compliance.

The Board Minda Corp has approved the proposal of raising of funds up to Rs 600 crore through issuance of securities via public or private offerings.

Indian Oil Corp Limited incorporated a JV company with NTPC Green Energy to develop renewable energy based power projects.

Tata Motors is working on several CNG and electric cars even as the automaker expects the passenger vehicle industry growth to moderate to 5-7% in the current financial year.

The Board of Muthoot Capital will consider a fundraising proposal through issuance of NCDs on June 7.

What to Expect Today?

NIFTY opened with a gap-up at 18,558 on Friday. It was an extremely volatile day. The index fell by 80 points after opening and there was a major recovery as well. Volatility continued and NIFTY closed at 18,534, up by 46 points or 0.25%.

BANK NIFTY opened with a gap-up at 44,015 and moved below 44K. The index took support at 43,800. However, there was a good recovery to 44,100 and a fall to 43,700. BN closed at 43,937, up by 148 points or 0.37%.

IT closed 0.4% lower.

The US markets shot up on Friday. The European markets also closed higher.

The Asian markets are trading well in the green.

The U.S. Futures and European futures are trading flat.

SGX NIFTY is trading higher at 18,720.

All the factors combined indicate a gap-up opening.

NIFTY has supports at 18,500, 18,400 and 18,350. We can expect resistances at 18,580, 18,660 and 18,700.

BANK NIFTY has supports at 43,800, 43,670 and 43,475. Resistances are at 44,000, 44,100 and 44,350.

FIN NIFTY has supports at 19,320, 19,235 and 19,150. We can expect resistances at 19,460, 19,500 and 19,615.

NIFTY has the highest call OI build-up at 18,600. The highest put OI build-up is at 18,500.

BANK NIFTY has the highest call OI build-up at 44,000. The highest put OI build-up also is at 44,000.

FIN NIFTY has the highest call OI build-up at 20,000. The highest put OI build-up is at 18,700.

INDIA VIX  is at 11.2.

Foreign Institutional Investors net-sold shares worth Rs 700 crores. Domestic Institutional Investors net-bought shares worth 600 crores.

As we discussed in the Dalal Street Week Ahead article, the weekly candle is again red. But the index saw an up-move WoW.

Zooming out, the market looks in a very bullish mode. There were minor pull-backs only. Even if the market consolidates here, it is favourable to the bulls. 

The global markets are rallying after the US markets shot up on Friday. Price action in NF looks good for another rally. Bulls have to just make sure that there is no sell-off after the gap-up opening.

It is after a gap that Sgx Nifty is trading 100 points higher in the morning. 

It is data-packed today. India’s Services PMI will be out today. EU, Germany, UK and USA also will release their PMI data. The major event of the week is on Thursday: Monetary Policy Meeting.

Looking at the hourly chart, you can see that 43,475 is a crucial support for BN. Let us see if the bulls can protect the level.

I will watch 18,500 on the downside in NIFTY. 18,660 can be watched on the upside.

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