When is the breakout?: Weekend Market Analysis : May 17 2021

 

• Last week nifty fall around 2.5% while bank nifty fall 3.5% after an attempt to move up, thereby continuing the consolidation since near 3 months now.

• While bank nifty could not even stay above 100 day moving average , nifty did conquer 50 dma but fall back from the 100 dma , at a major resistance near 15000.

• Nifty currently is taking support at 100 dma with near support at 14150 which is the previous swing low and major resistance above remain the 15050 levels as it is still moving in a trendline channel.

• There is a likely chance of both indexes having a 50 and 100 day moving average cross over to happen after one of the longest gap ever from previous crossover historically and this could mean this bearishness or sideways movement that could continue around 4 months based on average data.

• Bank nifty could find support at 30400 previous swing low levels and major resistance to move up would be 34300 which means above both 50/100 day moving averages and a trendline channel breakout.

• Nifty and bank nifty as daily momentum in the sideways zones and weekly momentum also resisting and moved into sideways.

• Monthly RSI momentum of nifty remain in bullish zones while bank nifty has given up the momentum bullishness for long term.

• Trend remain up for both indexes on ADX on long term while medium term trend is weakly in bullish zones and on daily timeframe trend is strong bearish for short term.

• Open interest analysis on nifty futures shows short covering .options data showing highest call writing 15500 but that may be due hedging but 15000 has a high resistance and 14000 is where supports are seen.

• Open interest analysis on nifty futures shows short buildup. Options data showing highest call writing at 32500/33000 while high supports are seen at 31000 levels.

• Pull call ratio showing bullishness of 1.11 for nifty while it is bearish for bank nifty 0.71.

• India VIX fall 2% last week even though market was falling which could probably mean the fear factor is less and markets may not fall big. IV is higher than historic IV slightly while the IVP says only 32% of time in past has been lower than current IV.

• FII sold heavily last 3 days something around 4000 crores which is a concern.

• Pharma,FMCG,Metal,Energy are sectors seen in bullish zone.

• Overall it is clear consolidation of market that is seen and as long as covid numbers don't further escalate, the market may not fall much and would continue the sideways moves. lowering VIX and nifty PCR indicate same but bearishness of bank nifty and FII selling remain concern for next week.

• Dollar index is falling and could break 90 support levels also but same time USDINR does not show any strength in rupees either. Historically market seen to move up when dollar index falls.

• Neutral options strategies based on support and resistance levels could work out during this phase for short term positional play. Intraday movements are very choppy these days and therefore scalping or directional option buying or selling with strict stop loss could be tried.