On Friday, the Nifty ended up 142.60 points, or 0.92%, at 15,699.25 and the Sensex gained 462.26 points, or 0.88%, to 52,727.98.
“The Nifty has managed to hold its higher base from 15,200 to 15,350 and now 15,555, which indicates an extended bounce of 300-500 points in coming days,” said Chandan
, derivative analyst, . “Mechanical indicators like RSI (relative strength index) have also turned from its key support with an oversold scenario which also indicates some short covering move in the monthly expiry week.”
Both indices ended the previous week with gains of around 2.7% but wild swings kept investors and traders on the edge. Analysts expect volatility to surge in the run-up to the June series expiry on Thursday.
“The coming week is likely to see a firm start and the levels of 16,000 and 16,100 are likely to act as immediate resistance levels,” Abhilash Pagaria, head-edelweiss alternative and quantitative research. “The trading range is likely to stay wider than usual.”
Market experts said the fall in commodity prices has prompted traders to cover a portion of their bearish bets but they prefer to be in a wait-and-watch mode before allocating fresh money.
“There has been a sharp correction in base metals and crude. Pullback has also been seen in S&P, Nasdaq and Dow,”said Hemang Jani, head of equity strategy-broking and distribution at Motilal Oswal. “At this stage we cannot say the worst is over. We need to see the progress of monsoon and quarterly numbers of companies, for which clarity will emerge in the next two to three weeks.”
From its highest level in 2022 of 18,350.95 hit on January 18, the Nifty is down 14.4%. Despite foreign investors showing no slowdown in selling, the market has been ripe for a bounce back.
Last week, a reading of the percentage of stocks above their 200-day moving averages (DMA) – a long-term technical trend indicator – below 15% signified extreme pessimism in the market, which has eventually led to a technical pullback, said
. The Nifty is down 15.6% from its lifetime high of 18,604.45 hit in October last year.
“As long as the Nifty sustains above the 15,450-15,500 support zone, the reversal could continue upto 15,970-16,030 zone, above which we could witness further short covering till 16,190,” said Sudeep Shah – head – technical & derivatives research,
Securities. “However, if the Nifty slips below 15,450, weakness could persist up to 15,270. Options data suggest a broader trading range of 15,500-16,030 for the upcoming week.”
