A quick run down through some market context.
Extreme violent moves on the financial index in the past week. A lot of spikes and breakdowns. BANKNIFTY made an 800 point range on Friday and closed near its opening range. The sell-off was seen across sectors, with metal stocks being one of the worst-hit. Hints from the Federal Reserve that it could hike interest rates from 2023 have put markets and commodities under stress, while the dollar has strengthened sharply. With global risk sentiment deteriorating, further selling in the short-term cannot be ruled out as markets price in the Fed's surprising shift in policy stance.
When the Nifty is moving down, it is attracting buyers and that is what seems to have happened last week as well.
However, despite the sharp recoveries in the indices, both of them have failed to close above the Thursday close which possibly means that the selling pressure is not yet over and there may be something in store.
Volatility is still relatively subdued but the context matters. Everything is tightening here right so considering the weekly reversal candle on the NIFTY index is concerning and volatility could really pop if there's more follow-through.
A lot of action on the U.S. Markets confronting one of the most noticeably awful weeks since January. Guess the OPEC and Fed meet gave quite a trigger towards a breakout on the Dow Jones & SPX index. They say don't short a dull market, well you might want to rethink that one.
Among the individual moves, the short end of the yield curve rose sharply in reaction to the Fed’s shift, while longer maturities fell. The dollar rally saw its biggest one-day jump since the march 2020 pandemic.
The surprise from the Fed’s shift was perhaps most pronounced in the currency markets. Such price activity could suggest that a revaluation of positioning is currently taking place.
We now head into the expiry week for the June series, the next week is likely to be interesting. India VIX closed below 15 on a weekly basis. The final moves are best left for the market to decide and we just need to react to what it offers.