Nifty Today Outlook Report - 12th May, 2022

Nifty started Wednesday’s session marginally positive but it was unable to hold in the positive territory for long. The index corrected sharply during the day and even sneaked below the 16000 mark. However, we witnessed some recovery from the lower levels in the last hour of the trade and the index ended above 16150 with a loss of about half a percent.
 

Our markets continued to trade under pressure for most part of the session with sharp selling seen in the broader markets. Nifty breached the 16000 mark once but since the momentum reading were quite oversold on the intraday chart, we saw a pullback in the end to recover some of the losses. The short term trend continues to remain negative, however due to over sold set ups on the intraday charts post a sharp correction; we are likely to see some in between bounce backs.

Nifty Today:
 

Traders are advised not to get carried with such pullback and continue to trade with a cautious approach until there’s a change in trend or the data. In the derivatives segment, since 16000 put option on both weekly as well as monthly series have decent open interest outstanding, this is the immediate support seen. A breakdown below this will then lead to unwinding of positions which could create more pressure on the markets. On the other hand, the immediate resistance in Nifty is seen around 16260 which is the ‘hourly 20 EMA’ and if the index manages to surpass this hurdle, then 16350-16400 would be the next range to watch out. 

The Bank Nifty has shown relative outperformance to Nifty since last couple of sessions. However, there are no signs of change in trend yet and thus it could just be a temporary outperformance till the pullback lasts. The Midcap as well as small cap space continues to underperform and is likely to see more correction in the near term.  Hence, traders should avoid bottom fishing until trend reverses.