Dalal Street Corner: After 3 back-to-back weak sessions, indices end higher by 0.5-1% this week; what should investors do?

Domestic benchmark indices Nifty50 and Sensex gained 0.5% and 1% respectively for the week ended May 27, 2022. After closing in the red for the first three sessions this week, the benchmarks bounced back in the next two sessions as they closed with gains of around one per cent each on the next two days on May 26 and May 27.  

For the week ended May 27, the recovery was largely led by banking and auto stocks as Nifty Private Bank and Nifty Auto closed the highly charged week with 4% and 3% gains respectively. Metal remained the top drag this week as Nifty Metal and BSE Metal closed lower by eight per cent in the last five sessions.  

"The Nifty had a volatile week, where it dipped below 16000-mark, however, managed to recover & closed in the green on the weekly chart," said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.  

The daily chart shows that the recent dip found support near 78.6% retracement level, which was near 15900. Thereon, the index witnessed fresh buying support. On the way up, it has crossed certain near term hurdles & is now once again approaching the crucial 16400 mark. The index has been facing resistance near 16400 for the last three weeks. Once the level of 16400 is crossed on a closing basis then the index will be set to target 16620 on the upside. On the other hand, the near term support zone shifts higher to 16200-16220. 

Meanwhile, the headline indices closed with more than one per cent gain each on Friday. The broader Nifty50 rose 1.13% as the 50-share blue-chip index closed at 16,352 and the 30-share index settled higher by 1.17% to 54,884.  

Even though Foreign Institutional Investors remained net sellers in May so far, offloading equities worth Rs whooping 51,847.89 crore as on Thursday, the volume declined in the last two sessions. FIIs sold worth Rs 1,803.06 crore and RS 1,597.84 crore on May 25 and 26 respectively. FIIs had sold to the tune of Rs 2,393.45 crore alone on May 24 I the Indian market.  

We have collated views of experts who decode the current trends in the market and talk about crucial support and resistance levels. They also suggest as in what investors should do in the current scenario. 

Vinod Nair, Head of Research at Geojit Financial Services.  

Joining the global rally, the investors were in a buying mood following favourable retail earnings in the US. Receding FII selling also provided comfort to the domestic market in bringing down volatility. The RBI’s upcoming policy meeting will be a key factor in the market, where they are expected to announce an additional policy rate hike of 25-35bps.  

Rupak De, Senior Technical Analyst at LKP Securities  

Nifty remained strong as it sustained above 16,200 throughout the day. Momentum oscillator, RSI is in bullish crossover and rising. Going forward, a decisive move above 16400 is likely to induce a rally towards 16700-16800. On the lower end, supports are visible at 16200/16000. 

Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.  

The daily chart shows that the recent dip found support near 78.6% retracement level, which was near 15900. Thereon, the index witnessed fresh buying support. On the way up, it has crossed certain near-term hurdles, and is now once again approaching the crucial 16400 mark. The index has been facing resistance near 16400 for the last three weeks. Once the level of 16400 is crossed on a closing basis, then the index will be set to target 16620 on the upside. On the other hand, the near-term support zone shifts higher to 16200-16220. 

Kunal Shah, Senior Technical & Derivative Analyst at LKP Securities. 

The bulls continued the momentum in the Bank Nifty index and ended near the day's high. The index remains in a buy mode as long as it stays above the level of 34,800. The upside levels of 36,200-36,500 are likely to be hit in the near term. The momentum oscillators are in the buying territory confirming the internal strength. 

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. 

Market data indicate that the weakness in the US market is coming to an end. The Fed minutes suggest pausing by year end after front- loading rate hikes. Also, there are indications of the US economy slowing down which will enable the Fed to be less hawkish than the market discounted.  

FPI selling, the main trigger for the market weakness in India, is showing signs of exhaustion. DII and retail buying and overwhelming FPI selling along with short covering can trigger a near-term rally. High quality large-caps can stage a rally. Leading banks are safe bets. 

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)