F&O expiry, the Fed meeting, and other things to keep an eye on in the stock market this week

Bulls made a comeback on the D-street on Friday, May 20, 2022, as a result of aggressive buying, ending the benchmark indices' five-week losing skid during a week of extreme volatility. Nifty was up 456.7 points, or 2.89 percent, at 16,266 levels as of Friday's end. The NSE's volumes fell a touch short of recent averages. Real estate, metals, capital goods, and healthcare sector indices have seen the largest gains. Additionally, the advance decrease ratio is strongly positive.

Sonam Srivastava, the founder of Wright Research, commented on the Indian stock market, saying, "This week saw a remarkable bounce, but scarcely anyone is confident that this rebound will stick, given the doom and gloom narrative from inflation monitors and central bankers. The leaders this week have been autos and FMCG, with metals also showing a sharp recovery; nonetheless, the surge of defensives and commodities is a typical bear market move. Therefore, the upcoming weeks will be marked by caution and risk mitigation.

The domestic market was moving in lockstep with its international counterparts this week, according to Vinod Nair, head of research at Geojit Financial Services. Market sentiment was dominated by concerns about the global economic slowdown and interest rate increases.

The Indian market became more volatile as FIIs resumed their selling binge in pursuit of high-yield US bonds, he noted. Value companies should perform well during this consolidation period, supported by a reasonable valuation, as investors are now investing with caution.

May Series F&O Expiry

On Thursday, May 26, the May series derivatives will expire, which will cause the market to experience greater volatility as investors approach the expiry with less certainty than they had last month. The market may respond to traders as they rush to square or roll over their holdings.

Inflation and Crude Oil Prices

The inflation statistics are still frightening the markets all around the world. Thanks to growing prices for commodities including metal, crude, food items, and more, the reading of the wholesale pricing index (WPI) soared to new highs in April, rising by 15.1% and recording the 13th consecutive month of double-digit growth.

However, the government reduced the price of gasoline and diesel over the weekend, offering some relief to the public. To lower prices, the government also reduced excise and customs duties on a variety of goods.

US Fed Meeting

On Wednesday of the next week, the officials of the American central bank will convene. Although they have already announced a 50 bps interest rate drop, more details will become available following the meeting.


According to the preliminary estimate of US Q1 GDP, the US economy fell by 1.4% on an annualized basis in the first three months of the year. The second reading for the biggest economy in the world will be released on Thursday, but no significant changes are anticipated.

The corporation could suffer as a result of worries about stagflation and a potential recession. However, other analysts and economists still believe that the US economy will expand this year and reject Q1 as a fluke.

FII Selling

Foreign institutional investors started selling Indian equities during the previous few months, which put the markets under persistent pressure. More than Rs 36,000 crore has been removed from the Indian equities markets by foreign investors. This month's results are also anticipated to follow the trend.

Nifty Technical Outlook

According to Santosh Meena, Head of Research at Swastika Investment Ltd., "Technically, the Nifty is trading in a volatile band between 15700 and 16400 while respecting the important support level of 15700. In contrast, if the Nifty slides below 15700, selling pressure may increase to 15500/15000 levels. If Nifty manages to persist above 16400, we may see a short-covering rebound towards 16700/16900 levels.

Bank Nifty

Meena stated, "Banknifty is also respecting 33000's psychological support while 34800 acts as a significant barrier. However, if Banknifty slips below the 33000 level, it may head towards the 32000 level. If Banknifty manages to take out the 34800 level, then we can expect a short-covering rally towards the 35500 level.

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