How do you see the stock market movement on Friday 27ths May? Do you see the bounce in the Nifty sustaining?

Nifty closed on Thursday with a surprising gain of 144 points at 16,170. The sharp recovery was on the back of a bounce in the global markets in the second half. With US Q1 GDP growth expected to be negative and China likely to give a growth thrust to avert a slowdown, the metals have led the sharp spike in the stock markets.

In terms of the market structure, the breadth of the Nifty turned decisively positive at 39:11 and this shift was led largely by the financials, metals and IT stocks. VIX fell sharply by more than 10% on Thursday to 22.72 levels, showing that with optimism the fear levels had subsided. The first key data point will be the PCE inflation on 27th May.

FPIs net sold Rs.1,598 crore in equities on Thursday while domestic funds and LIC bought Rs.2,906 crore of equities. However, the underlying FPI theme is still negative. In global markets, Dow gained 517 points, NASDAQ gained 306 points led by hopes of a less hawkish Fed and a recovery in China. In Asia, Nikkei and Kospi are 1% higher while the SGX Nifty has been trading about 75 bps higher in early trades.

Nifty has taken support at its range of 15,800 to 15,900 levels and it has been quite decisive. However, the next up move will be confirmed only if Nifty moves above 16,400. The recovery on Thursday was positive but we need to await positive data cues from the US PCE inflation on Friday and the India GDP data and core sector data next week.