Weekly view on nifty and banknifty: 23 -27 May 2022

The last week witnessed volatile movements in both the Nifty as well as the Banknifty indices. While Nifty opened the week on 16^th May close to its support level of 15750, it closed around those levels itself. The next four days saw huge swings with the Nifty touching 16300, taking a dive of 500 points and then bouncing back to close at 16266, 516 points above the previous week.

For the Banknifty the week started with it closing higher on Monday and Tuesday but losing 1400 points over the next two days and closing higher by 1000 points on Friday at 34276.

Investors are concerned about what direction are these indices likely to take this week. Let us look at what the next week holds in terms of price movement on the Nifty and the Banknifty for the week starting 23^rd May 2022.

Nifty is still trading below the 100 and 200 day exponential moving averages, indicating a technical weakness in the charts.

Nifty trading below 100 as well as 200 day exponential moving averages at end of last week

This week will determine whether the Nifty will continue its upward move or retrace and test its support level. There are two possible scenarios and both are likely to show a sharp price movement.

In the first case, if the Nifty continues its upward move, it will cover the gap on the charts and either cross the levels or close at the 16800 levels.

In the other case, Nifty would retrace and test the previous support level of 15750 and close around those levels.

It is most likely that it might begin the week continuing the upward move and then determine its direction for the week.

Start of next week crucial to determine decisive movement

Banknifty has followed a different pattern than the Nifty. It did not test its support at 32000 level before moving higher, but during this week’s movements formed a new support level at 33000, higher than the previous support level. This higher support level indicates that the Banknifty is ready to move higher this week.

Banknifty trades higher this week and forms a new support level at 33000

For this week, it is possible that the Banknifty moves higher, and cover at least 1000 points on the upside to close the week at or above 35600.

The other probability is that it may try and test the newly formed support by the end of the week, even if it moves higher during the early part of the week.

Banknifty is most likely to continue its upward move in the beginning of the week

In either case, as with Nifty, whichever price direction it takes it will be accompanied by a sharp price movement.

As we enter the next trading week, the first trading days will give a clue in which way we would end the week. In all probability, both the indices are likely to head higher by the end of the week, if there are no negative cues or unexpected events that may drag them down to support levels.

Note – This channel is for educational and training purpose only & any stock mentioned here should not be taken as a tip/recommendation/advice

Research done by: Ketan Sonalkar, SEBI Rgn No INA000011255