Chartist Analyzes Market Trends: FII Short Build-up Spotted, Two Stocks to Watch for Next Week

Market Sentiment Weaks Further, FII Positioning Suggests Bearish Bias

The market sentiment has weakened further, with the long-short ratio in index futures dropping sharply to 11.49 percent from 22.66 percent on April 21. This indicates an aggressive build-up of fresh short positions, according to Sudeep Shah, Head - Technical and Derivatives Research at SBI Securities.

Key Stocks to Watch

Bharti Airtel and Deepak Fertilisers & Petrochemicals Corporation are two stocks that Sudeep Shah has identified as potential buys for next week. Bharti Airtel has given a parallel channel breakout on the daily chart, backed by a solid follow-through move. The stock has been consolidating within the Rs 1,747-1,894 range since early March, and the recent breakout signals a shift in trend.

Read also: Treasury Yields Experience Largest Increase in Two Weeks Following Release of Labor Market Data

FII Positioning Continues to Signal Bearish Bias

FII positioning continues to signal a clear bearish bias. Foreign investors have extended their selling streak to nine sessions, offloading Rs 8,047 crore on April 30, taking cumulative outflows to Rs 30,911 crore. This persistent selling pressure reflects a risk-off stance in the cash market.

Nifty 50: Will it Break 23,800 or Act as Support?

The Nifty 50 has been moving in a tight consolidation range of 24,335-23,798 over the past six trading sessions, indicating a phase of indecision. This cautious behavior can be attributed to several factors, including rising Brent crude prices, concerns over the sustainability of the US-Iran ceasefire, upcoming state election outcomes, and the USD/INR touching fresh record lows. With multiple variables at play, the market appears to be at a crossroads, potentially gearing up for a decisive move in either direction.

Read also: US-Iran Tensions Spark Uptick in Oil Prices Amid Global Market Decline

Volatility Expected to Remain Elevated

Looking ahead, volatility is expected to remain elevated in the near term. On the upside, the 24,300-24,350 zone will act as a crucial resistance band. A sustained breakout above 24,350 could pave the way for a rally towards 24,500, followed by 24,700. On the downside, the 23,800-23,750 region remains an important support zone. A breach below 23,750 may trigger further downside towards 23,600 and subsequently 23,400.

Stock Performance

Bank Nifty: Will it Test 54,350?

The Bank Nifty ended April with a strong gain of 9.13 percent. On April 21, the index marked a high of 57,456, after which it witnessed a swift correction of nearly 2,600 points over just six trading sessions. This price action resulted in the formation of a bullish candle on the monthly chart, characterized by a long upper shadow and a minor lower shadow, indicating selling pressure at higher levels.

Nifty IT Index: Will it Continue its Downward Trend?

The Nifty IT Index remains in the lagging quadrant of the Relative Rotational Graph (RRG), reflecting weak relative strength and subdued momentum. Disappointing Q4 earnings have further dampened sentiment. Technically, although the index has seen a mild pullback from the 28,450-28,250 support zone, it continues to trade below key short and long-term moving averages.

BHEL: Will it Sustain its Uptrend?

The recent breakout in BHEL has been supported by strong volumes, which is a positive sign and reflects underlying buying interest. However, the stock has also entered the overbought zone on momentum indicators. Given this setup, it is likely that the stock may undergo a phase of consolidation in the near term before resuming its next leg of upward movement.