What are the major stock market cues for Tuesday, 22nd June 2022?

There was a sharp bounced in the markets on Tuesday as the Nifty rallied by 288 points and the Sensex rallied over 934 points. The gains were largely in line with the global trend, with most of the international markets showing sharp gains. The A/D ratio of the Nifty was decisively positive at 48:2, but weak FPI flows hinted at heavy short covering of positions.

On Tuesday, the market bounce was led by consumer stocks and metals, which saw aggressive short covering after the sharp correction in the last one week. All sectors on the NSE were in the green even as the VIX tapered to 21.14 levels. In terms of sectoral gainers, the Metal and PSU banks were among the top gaining sectors amid short covering.

FPIs net sold Rs2,701 crore even as domestic funds bought stocks worth Rs.3,066 crore on Tuesday. Despite the sharp rally, the FPIs were on the sell side, hinting at short covering. The Dow gained 642 points and NASDAQ was up 271 points on Tuesday. In early trades, SGX Nifty is trading with gains of 50 bps, while action shifts to commodities and dollar.

In terms of strategy, remember that the FPI selling hints at aggressive short covering than fresh buying. On Tuesday, the rupee weakened sharply to 78.14/$ levels which is a negative. However, crude oil prices tapered to $114/bbl. That was less due to supply improvement, and more due to demand concerns amid a likely slowdown in global economy. Be cautious.