Nifty Weekly Expiry 23 May 2024: Strategy for the Day

Nifty Rallies for Fifth Straight Day

On Wednesday, the NSE benchmark Nifty 50 index rallied for the fifth consecutive day. The Nifty gained 0.31% and closed just shy of the 22,600 mark. Notably, it closed above its prior day’s high and near the day’s peak. Despite lower trading volumes compared to the previous day, the index managed to erase initial losses in the afternoon session. Importantly, the Relative Strength Index (RSI) is poised to enter the strong bullish zone, and the Moving Average Convergence Divergence (MACD) indicates increased bullish momentum.

Market Performance and Sector Rotation

The indices opened on a weak note but recovered to close near the day’s highs. Heavyweight stocks such as Reliance, Infosys, and IT contributed over 56 points to the index’s performance. Open Interest remained flat, and the Nifty closed at its highest level since May 2. On the weekly chart, the index formed a strong bullish bar and closed above the two-week high. On the daily chart, it formed a candlestick pattern with a small body and a long lower shadow. Sector rotation has shifted to FMCG and IT sectors.

Key Levels for Nifty During Weekly Expiry

As expected, the Nifty moved higher once it closed above 22,520. It closed above the rising channel’s mean level. If the Nifty fails to close above Wednesday’s high of 22,629.5, it will be negative for bulls. Above this level, the index may test a new high before the election results. On the downside, the Nifty must protect the 22,400 level, with the next support at the 50-day moving average (DMA) around 22,323. Only below this level might the market become nervous and trade with more volatility.

Volatility Concerns Amid Weekly Expiry and Fed Signals

Volatility could be a hallmark of Thursday’s session amid the weekly expiry of Nifty and a souring market mood due to hawkish signals from the Fed’s May FOMC meeting minutes. Additionally, the India VIX remains above the level of 21, indicating sustained market volatility.

Strategy for the Weekly Expiry of Nifty

• The Nifty closed above the prior day’s high. A move above 22,600 is positive, with the potential to test the level of 22,710. Maintain a stop loss at 22,555. 
• Above 22,170, continue with a trailing stop loss.
• However, a move below 22,555 is negative, potentially testing 22,487. Maintain a stop loss at 22,600. 
• Below 22,487, continue with a trailing stop loss.

Disclaimer: This post has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.