Nifty Weekly Analysis for the week ending 26 May 2017

Key Points:

•           World Indices hits fresh record high (S&P, Nasdaq & Kospi)during the week
•           Nifty hits another record high hits 9600 for first time ever.
•           Nifty made weekly bullish hammer.

Nifty opened the week at 9480.25, made a high of 9604.9, low of 9341.65  and closed the week at  9595.1. Thus it closed the week with a gain around 167 points.   Nifty made a weekly hammer candle.

Sector-wise, the top gainers were the Metal, Auto and FMCG indices. The top losers were the Pharma, Telecom, Media and Infrastructure indices

Last week I mentioned Indiavix hit the low of 8.84, so there is a probability of high volatility in coming days. 

As I mentioned in the last week ,  Market witnessed volatile movements in the week.

First three days of the week market made daily lower low and lower high.  On Wednesday Market closed below 20 days moving average and touched low of 9341.65 thus loss of 191 points.  In daily chart Oscillators moved into oversold area and bullish divergence was visible.  On Thursday, last day of May Expiry, Index made a stellar rally and made a strong bullish candle since February 1.  It also retraced previous 5 days in just one day and made a high of  9604.9 and closed at 9595.1, a gain of 250 points.   Positive global cues also boosted sentiment; S&P 500 and Nasdaq hit record closing highs on Thursday.  Kospi hit record high today.

This is the second time Nifty closed below 20 days moving average in this uptrend started from December 2016.  Similar scenario happened in last month.  On  1^st week of April Nifty made an all-time high.   Market didn’t sustain and made a 9 days correction of 198 points and closed below 20 moving average.  On Weekly chart Nifty made two consequent lower low (but that is not happened now).   Market retraced previous 9 days just in 4 days and made a gain of 457 points.   Considering this, target for current upmove can be 9684-9800 level.

Last week I mentioned about P/E ratio. Nifty P/E Ratio reached 25.23on 17th May.  On the same day Nifty high was 9532.6.  25 onwards Market is very expensive.  Same day market made a correction 191 points.  Curiously on 26^th May, Nifty made high of 9604.1 and closed at 9595.1.  But P/E ratio showing 24.32.  There are some valuation changes have been happened in Nifty 50 stocks.  Grasim out from Nifty 50 replaced with Vedanta. 

On the Option front, highest Put OI at strike price of 9300 ad 9400 and highest call OI at 9600 and 9700.

Bank Nifty made all time high and invalidated our previous assumption of Double Top.  PSU Banks not joined the rally and made a big weekly bearish candle.