Nifty, Sensex set to open positive

K. S. Badri Narayanan | Updated on: May 26, 2022

F&O settlement, FPI selling to add volatility

Domestic markets are expected to open positive, despite mixed global cues but analysts expect the market to remain volatile due to the settlement of monthly derivative contracts on the NSE.

SGX Nifty at 16,100 indicates a gap up opening of about 80 points for Nifty here. However, Asian stocks are ruling mixed with Korea, Malaysia and New Zeland ruling in green even as equities across Tokyo, Australia and China are down marginally. The US stocks staged a strong recovery overnight, thanks to US Fed's 'expected' minutes. While Nasdaq surged 1.5 per cent, S&P 500 and Dow Jones edged up 0.95 per cent and 0.60 per cent respectively.

PR Sundar, a market veteran, said in a tweet "Do not look at May Future as it expires tomorrow, look at June Future, people are shorting there For the first time in Indian Stock Market History, next month future trading at discount to current month future".

Nifty June futures closed at 16,012 while May futures at 16,013 against Nifty spot close of 16,025.

According to analysts, only certain is volatility, be it global or domestic markets. "Globally, each and every markets have their own pulls and pressures besides the uncertainty at the US markets," said a veteran market participant.

Pressure on mid-cap stocks

Analysts expect the mid-cap and small-cap space will continue to remain under presssure. Over 2,600 stocks closed in the red on Wednesday.

According to Ruchit Jain, Lead Research,, the Nifty Midcap index was unable to surpass its moving average hurdle and has resumed its ‘Lower Top Lower Bottom’ structure. Thus, the downtrend has resumed post a consolidation phase in the midcap space and it could well spill over to the indices as well in the near term."

Eyes on central bankers

Arafat Saiyed, Senior Research Analyst at Reliance Securities, said: "As investors await on the last leg of earnings results which will end by this week, the primary focus in the coming weeks will be on the central banks’ policy measures to stabilise inflation."

However, continuous FII sale and plunging rupee are likely to have economic implications in the near-term, he cautioned and adding: "Overall, theeconomy has been resilient despite the volatile environment. Globally, the Russia-Ukraine crisis and supply chain disruptions continue to impact global and Indian equities."

Technically too bearish

Technical analysts are also of the view that the market will face correction on every rise.

"We are of the view that the short-term market structure is weak but it is in an oversold territory. For traders, now 16000 would act as a sacrosanct level. If the index succeeds to trade above the same, then it could move up to 16150-16260. However, below 16000 the selling pressure is likely to increase. Below the same, the chances of hitting 15900-15850/53300 would turn bright,” said Shrikant Chouhan of Kotak Securities.

Published on May 26, 2022
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