Trade Setup for May 23: Nifty Remains Buy on Dips Ahead of Weekly Expiry Even as Banks Put Pressure

The Nifty index has continued its upward trend, gaining for the fifth consecutive day on Wednesday. Despite the absence of significant moves, the index is nearing a crucial level at 22,600. Sustaining above this mark could pave the way for new highs. The market remains cautious ahead of the Lok Sabha election results, with traders adopting a wait-and-watch approach.

Key Market Insights:

• Nifty Performance: The Nifty has been making higher highs on daily charts for the last seven sessions, although the gains have been incremental. The index turned positive for the May F&O series, maintaining a slight edge.
• Weekly Expiry: Thursday marks the weekly options expiry for the Nifty 50 contracts, which will be the second last for the May series. The recent performance has provided a positive outlook for the series.
• India VIX: The India VIX declined on Wednesday, indicating reduced market volatility and providing some comfort to bullish traders. However, it remains above the 21 mark.
• Institutional Participation: Foreign Institutional Investors (FIIs) continued to be net sellers, though in smaller quantities. Domestic Institutional Investors (DIIs) outbought FIIs marginally, reflecting cautious optimism.

Stocks to Watch:

• Quarterly Results Impact: Stocks like Gland Pharma, Jubilant Foodworks, Grasim, Garden Reach Shipbuilders, Power Grid, Metro Brands, and Minda Corp will react to their quarterly results announced post-market hours on Wednesday.
• Upcoming Results: ITC, a Nifty heavyweight, will report its results on Thursday. Other companies releasing results include Barbeque Nation, Cello World, Finolex Cables, Fortis Healthcare, Honasa Consumer, Schneider Electric, Orchid Pharma, Tega Industries, Steel Strips Wheels, and TD Power.

Expert Analysis:

• Ruchit Jain, 5paisa.com: Jain notes that the immediate support base for Nifty has shifted higher to the 22,430 – 22,370 range. He advises traders to maintain a positive bias and consider buying on intraday dips as long as this support holds.
• Rajesh Bhosale, Angel One: Bhosale highlights the importance of the 22,700 – 22,800 range. A close above 22,800 could drive the index towards 23,000 – 23,100. On the downside, 22,400 is a key support level, with dips towards this level presenting buying opportunities.

Conclusion:

The Nifty continues to edge higher, driven by positive sentiment and strategic support levels. As traders anticipate the Lok Sabha election results and navigate through the weekly options expiry, maintaining a positive bias on the index with a focus on key support and resistance levels could prove beneficial.

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