Nifty Outlook for the week 22nd MAY to 26th MAY

NIFTY

Title: Indian Equity Markets End Volatile Week with Modest Gains as Buying in IT, Realty, and Banking Stocks Boost Sentiments

 

Introduction:

Indian equity markets rebounded on Friday, snapping a three-day losing streak and closing the volatile session with modest gains. The positive momentum was driven by buying in Information Technology (IT), Realty, and Auto stocks, while some selling pressure was witnessed in Pharma and Fast-Moving Consumer Goods (FMCG) counters. The market sentiment was further bolstered by advances in Adani group stocks following the release of an expert committee report. Despite the overall gains, the market breadth remained negative, with more declining shares compared to advancing ones. The broader markets underperformed the benchmarks, with the Nifty midcap index ending lower and the small cap index closing flat to positive. This article examines the key factors influencing the market's performance and analyses the technical patterns observed in the Nifty index.

Market Performance and Sectoral Analysis:

On Friday, the Sensex and Nifty indices posted gains of 0.48 percent and 0.41 percent, respectively. The positive trend was primarily driven by the performance of select sectors. The IT, Realty, and Auto sectors witnessed significant buying interest, contributing to the market's upward movement. Conversely, the Pharma and FMCG sectors experienced some selling pressure, which limited the overall market gains. The buying spree in Adani group stocks, following the expert committee report, further boosted market sentiments.

 

Technical Analysis:

The Nifty index exhibited a bullish hammer pattern on the daily chart, suggesting a possible reversal in the trend after a reasonable decline. However, it is crucial to note that on the weekly scale, a bearish candle with upper and lower shadows was observed. Therefore, while the hammer pattern signals a potential upside, a decisive move above the 18450 level is required to confirm the reversal and negate the bearish effect of the weekly candlestick pattern.

 

Key Support and Resistance Levels:

From a technical perspective, the 18050-18000 range served as a strong support zone during the session, highlighting its pivotal role. This support level played a significant role in safeguarding the market from further decline and is expected to act as a key anchor in the near term. On the upside, the range of 18400-18450 is likely to act as a sturdy resistance level. A decisive breach above this range would be necessary to trigger fresh long positions in the market.

 

Conclusion:

Indian equity markets managed to rebound on Friday, ending a three-day losing streak and closing with modest gains. The buying interest in IT, Realty, and Auto stocks, along with positive developments in Adani group stocks, contributed to the market's upward movement. However, the market breadth remained negative, indicating a cautious sentiment among investors. Technical analysis suggests a potential reversal in the Nifty index, with the formation of a bullish hammer pattern on the daily chart. Nonetheless, confirmation of the reversal would require a decisive move above the 18450 level. Traders and investors are advised to closely monitor these technical levels and sectoral dynamics for further insights into the market direction in the upcoming sessions.