The Trade setup for market is showing strong momentum even in the absence of significant global cues, providing a clearer movement. Today, the market opened positively and briefly tested the 50-day moving average (MA) for a few minutes before making a strong bounce back. The next three to four five-minute candles showed a sharp recovery. Throughout the day, the market struggled to close below the five-minute simple moving average. However, by the end of the day, some selling pressure led to a lower closing.
The market raises questions about its sustainability, as global cues remain uncertain. This was evident in the late session when bears exerted pressure, causing the market to close near 23,000. Since the market did not close above 23,000, tomorrow’s trade setup will be crucial to see how it respects this round-number level. If the market closes above 23,000, it could indicate a positive outlook. Meanwhile, trade deals between the US and India have not reached a positive conclusion, according to confirmed sources. No significant reasons have emerged to justify the sustainability of the Indian market. Additionally, FIIs registered a negative closing today, further influencing market sentiment.
The Federal Reserve’s policy announcement regarding US interest rates, scheduled for midnight, will be a crucial factor. The market’s reaction to this outcome will be closely watched.
Global Market analysis for Trade setup
There has been significant political drama involving US President Donald Trump and Russian President Vladimir Putin. Reports indicate that Trump had to wait nearly an hour for a scheduled two-hour call with Putin due to Putin’s prior engagements at an investor summit.
Putin, known for his strong geopolitical strategies, may have used this delay strategically. Reports suggest that he has set conditions for a ceasefire, though no conclusive agreement on the Russia-Ukraine war has emerged from either the White House or Moscow. Russia appears to be leveraging the ongoing conflict for its advantage.
Ukraine seeks to capitalize on the situation, while the US wants to resolve the conflict as soon as possible. Meanwhile, Putin has reportedly demanded that Crimea be recognized as part of Russia by the US, UN, and Europe. Additionally, he insists that Russian-occupied territories in Ukraine be officially acknowledged as part of Russia and that Ukraine abandon its NATO membership aspirations. Furthermore, he demands that all Western-supplied defense equipment in Ukraine be withdrawn.
The ongoing uncertainty surrounding these negotiations is affecting market sentiment. Earlier optimism about an end to the Russia-Ukraine war had fueled a market rally, but the current developments raise concerns about sustainability.
Nasdaq has not reacted positively to the ceasefire discussions, and it corrected by 1.66% (328 points) due to anticipation of the Fed policy outcome. However, Nasdaq recovered by nearly 1% during the session. Analysts widely expect the Fed to delay rate hikes, but the commentary on the US economy and inflation will be key to watch.
FII and DII Activity & Derivative Market
FII and DII Activity
As previously analyzed, FII buying has been cautious. While FIIs had recently been net buyers, they have now resumed selling pressure on Indian equities. Today, FIIs sold nearly 1,096 crores, impacting Nifty, which still closed 73 points higher. Meanwhile, DIIs bought 2,140 crores.
It remains to be seen whether FIIs will continue their selling trend or soften their stance. Reports suggest concerns over the Chinese economy, which has struggled to generate investor returns over the past two quarters. However, Chinese equities have shown some upside, and FIIs have maintained a presence there. If the Chinese market continues to struggle, FIIs may shift their focus to Indian equities, which have seen strong consolidation over the last two quarters.
Derivative Market for Trade setup
In Previously blog we analyze option chain, option it did not indicate strong support till 22,700. However, now several put writers near 22,700 and 22,800 have established strong positions, making them short-term support levels. With expiry approaching, more put writers are entering the market to benefit from theta decay.
also check : Trade setup for tomorrow; Russia -Ukraine ceasefire, Nifty prediction, FII net buyer
On the upside, 23,000 remains a strong resistance level, with 162,135 contracts, while 22,900 has 112,348 contracts. Market participants should watch whether positions are shifting to other strike prices, which could indicate a choppy movement around 22,800-22,900. However, market opening conditions may alter these numbers, so further analysis is needed.
Domestic market analysis
The market is attempting to sustain its positive momentum, but concerns remain about its continuity. One major issue is the lack of clear signals from Russia regarding the end of the conflict. Reports indicate that Russia aims to extract maximum advantage from negotiations, which could be a negative factor for global stability. This will make it difficult for the US to convince European nations and Ukraine to agree to Russia’s demands.
Additionally, the commodities market continues to rise, with gold and silver hitting new highs. A rising commodities market is typically seen as a negative indicator for equities. The simultaneous rise in both equities and commodities is unusual and suggests potential instability in the market.
The cash market may be experiencing a technical rebound after correcting nearly 15% from its highs. While this may provide short-term opportunities, questions about sustainability remain. Comparing this with the commodities market paints a complex picture of market direction.
In the currency market, USD/INR is strengthening, reaching a six-week peak at 86.30. This adds another factor to consider in market sustainability.
A deeper analysis of Nifty 50 shows that financial sector stocks, particularly banking and NBFCs, are leading the index higher. Meanwhile, the IT sector is underperforming, raising concerns about the future of the US economy. The domestic economy remains strong, which is why banking and financial stocks are performing well compared to IT stocks.
Nifty prediction – Technical Analysis
The continuation of market momentum has activated bullish sentiment. Traders who rely on moving averages may find strong trading opportunities. Over the past three to four months, Nifty 50 has consistently respected its daily moving average levels. Currently, Nifty 50 is approaching the 23,000 level, which aligns with a moving average resistance level.
For bearish traders, this could be a good opportunity to take short positions with a stop-loss just above the moving average resistance.
For traders using Fibonacci levels, Nifty 50 is nearing the 50% retracement level, which is a key trend-reversal point. This could prompt profit booking or fresh short positions.
However, if the market maintains momentum without any bearish price action near the moving average, it could indicate further bullish movement.
Conclusion
The market has shown strong momentum in recent days, partly due to global cues such as ceasefire discussions in the Russia-Ukraine war and potentially dovish comments from Jerome Powell regarding the US economy. The prolonged consolidation period has also contributed to the rally.
However, Russia’s insistence on securing maximum advantages from ceasefire negotiations adds uncertainty. The upcoming Federal Reserve policy outcome will significantly impact short-term market direction. Additionally, FIIs have turned net sellers, which raises questions about tomorrow’s trade setup.
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