- The Indian benchmark Nifty 50 has experienced a significant decline of 3 percent in May, equivalent to 674 points, despite hitting a fresh all-time high of 22,794.70 on May 3, 2024.
- Market sentiment has been subdued due to persistent selling by Foreign Institutional Investors (FIIs), a rise in US bond yields, and concerns surrounding the upcoming election outcome.
- Analysts anticipate that this trend of volatility is likely to persist in the near future, especially in the absence of significant positive catalysts.
Amid a downturn in the Indian benchmark Nifty 50, market sentiment remains subdued. Analysts predict continued volatility in the absence of significant positive catalysts.
Market Outlook Amid Election Uncertainty
Experts indicate a negative outlook for the Nifty, cautioning traders against buying on dips until positive signs emerge. The Nifty trend and outlook are now negative for near-term (daily), short-term (weekly), and midterm (monthly charts) traders, implying a negative risk-reward proposition for traders.
Key Levels to Watch Out For
Asit C Mehta Investment Intermediates has suggested avoiding buying this dip as Nifty closes below 22,000. He has listed 5 observations to support this, including a breakdown of this calendar year’s trendline for Nifty on a closing basis, negative divergence between RSI and Price, possibility of double top formation on a near-term basis, on the verge of breaking down of a channel which is upward sloping, and correction led by heavyweights with high volumes.
Advice for Traders
Sameet Chavan, Head Research, Technical and Derivative – Angel One, also advised traders to not be swayed by temporary rebounds and to maintain light positions until concrete signs of a bullish reversal emerge, especially with the impending Lok Sabha election results. Regarding levels, the 89EMA at 21,900 serves as immediate support, followed by previous swing lows in the 21,800-21,700 range. On the upside, the zone between the 20 and 50EMA, around 22,200-22,300, presents a formidable obstacle.
Conclusion
Traders are advised to closely monitor key levels and adjust their strategies accordingly amidst the prevailing volatility. The break of 22,000 in Nifty did bring in jitters, and the recovery swing on Friday failed to push much above the upside marker of 22,095. However, a relief rally aiming 22,223-22,400 is likely to unfold in the early part of this week, according to Anand James, Chief Market Strategist, Geojit Financial Services.
