May month could be a disaster for the Indian stock market; Be careful

Sell in May and go away- Important Phrase. May month could be a disaster for the Indian stock market; Don’t forget the important phrase.

Nifty and Bank Nifty

On the monthly chart, a Nifty future formed a hanging pattern which is a sign of bearishness. A deep consolidation from the last 8 months and heavy sell-off from FII during 2022 is creating havoc in the market.

If we consider data from 2009 to 2022, FII has nothing left to sell in the market. FII’s sold heavily in the year 2022.

A decisive close below 16800 will take Nifty futures to 15500 levels.

Three consecutive closes + weekly close below 15500 will see further downside panic till 13000 levels.

Here RSI is diverging which is supporting our negative view. Here we recommend our subscribers to stay away from the investment point of view at least for the month of May or try to hedge their long position with options or shorting Indices. Short sellers may gain handsome returns in the next month.

Our negative view gets negate on the weekly close above 18500 levels.

On the other hand, Bank Nifty is also having the same situation. It looks weak below 35500 and could test 32000. Three consecutive closes + weekly closes below 32000 will take Bank Nifty to 28000—25000 levels.

Bank Nifty will turn positive only and only close above 40000 levels.

So things are not good. Inflation is high, global political tensions are high, and the US is ready to increase its interest rate. All of the above Dollar Indices are trading at higher levels.

We recommend our subscribers that please stay away from the Indian stock market in the month of May. If this month gets survive easily in a consolidation phase then only we expect a good upside move after mid-june 2022.

Nifty Media

Looks extremely weak on the monthly charts. Formed Dark cloud cover and a strong red candle on the charts. We suggest our subscribers that go short in Nifty media stocks or try to exit on the rise. Don’t hold the position in the media stocks.

Nifty media stocks are likely to crash till 1850 levels i.e. 13—15% from the weekly settlement. Any sharp rise till 2230—2280 will be the best selling opportunity in it. Our negative view negates after the weekly close above 2500 levels. We expect Nifty media likely to test 20 DSMA.

On the other hand. RSI also shows weakness on the chart. A decisive break below 53.00 will create huge panic in the media stocks.

Nifty Oil and Gas

Due to global pressure on oil and gas; stocks are still showing strength on the monthly chart but we will buy only and only above 8525 levels else it could test its support level of 7800—7500 again. Trends get negative on a weekly close below 7500 levels. We will expect negative bias trading within a range of 7500—8500 in the entire month.

Nifty PSU Bank

Nifty PSU Bank showed dull movement in the month of April 2022 though traded with a positive bias. We don’t expect PSU Banking stocks to hold at upper levels. Nifty PSU Banks have crucial support at 2700. A decisive close below 2700 will take bank Nifty to 2400—2250 and then to 1900 levels in days to come.

Our view gets positive on a close above 3150 levels only. RSI is too on the divergence mode and showing that strength may get exhausted soon. Here we don’t recommend our subscribers to invest in PSU Banking stocks.

Nifty Realty and Infra

Both sectors are trading at the top but RSI shows diversion clearly. We will remain cautious at upper levels because weakness is showing on the monthly chart. Still Nifty realty and Infra sector is trading above 20 DSMA but we have doubt that stocks will sustain at higher levels.

Nifty infra has support at 5000 while Nifty realty has support at 425. We expect to trade in a range with negative bias. Be careful at higher levels.

Nifty Commodities

Nifty commodities traded sharply in the month of April because of Inflation. Nifty commodities are trading at 52 week high. We expect that momentum remains to continue in the stocks. Don’t go for aggressive selling in commodities and consumption stocks.

Nifty Auto

Looks weak below 10450. This month we have seen a dead cat bounce in auto stocks. We will do fresh selling only if it closes below 10450 levels or else it could test its resistance level of 11300—12200 again.

Fresh buying we will initiate on a monthly close above 12300 levels.

Who will save below 10450? The downside target looks 9500—8000 levels.

Nifty IT

We are not in favor of buying IT stocks. Nifty IT first formed a bearish engulfing pattern and thereafter a continuous red candle. This month we have seen a free fall in IT stocks. We expect IT stocks to fall more in the month of June. Downside target looks 29000 in Nifty IT.

Any sharp rise till 33500 will be the best selling opportunity in IT stocks.

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