Hello reader, hope you’re doing well. The uncertain stance of the Fed and ongoing talks about the US debt ceiling are casting a shadow of volatility in the markets. With the Nifty facing potential trouble ahead of the June 1st deadline, cautiousness prevails. Technical conditions indicate an overbought state, highlighting the need for caution. Nifty’s major obstacles lie at the 18473 mark, and only surpassing this level will set the stage for its all-time high at 18888. In contrast, Bank Nifty’s upward trend is poised to surge once it surpasses its all-time high at 44153, targeting the psychological milestone of 45,000.
Important points to note:
- A significant trend in the market now is India’s outperformance compared to most developed and emerging markets. Nifty is up by 2.9% during the last one month compared to negative growth in Europe, around 1% growth in S&P 500 and lacklustre performance in most emerging markets.
- The important factor driving India’s outperformance is the sustained FPI inflows which has touched Rs 28169 crores in May till 24th. (Source: NSDL) FPIs have been buyers in India in nineteen out of the last twenty trading sessions. This trend is likely to continue since India’s growth and earnings prospects are much superior to those of other economies.
- The important factor weighing down the markets in the near-term is the lack of breakthrough in the US debt ceiling impasse. Investors may utilise the current weakness in the market to buy high quality stocks since resolution to the debt ceiling impasse is almost certain and post the resolution a rally is likely.
- With today being the final expiry session of May series, expect a good bout of volatility and nifty’s range to be within 18200-18300 for today, a break on either side will result in a good trending move.
As always, risk management is key, and a proper system in place prevents one from losing out too much, in case of outlier events. Have a good trading day, and may the force be with you!
Disclaimer: this post is for educational purposes only, we are not SEBI registered analysts. Trades mentioned here are not trade recommendations. Equity Investments are subject to 100% market risk, please consult your financial advisor before investing.