Key Highlights :
     The Indian stock market has been consolidating in the week of May, with NSE Nifty and BSE Sensex closing flat amidst heightened volatility. Technically, both Nifty and Bank Nifty are struggling to give a fresh move above their key resistance levels; Nifty needs to make decisive move beyond the 18,600-18,700 band to touch lifetime highs. The market has been fuelled by MSCI rebalance, with Foreign Institutional Investors (FIIs) being aggressive buyers for the whole of May, investing Rs43,838 crore.
     Investors seem to have forgotten the Covid pandemic-induced crash, with many eager to increase their return by adding more stocks. This is a result of a phenomenon known as ‘spontaneous distortions of memory’, which makes us feel better about ourselves and our investments. Studies have shown that people tend to remember voting regularly in national or state elections even when they haven’t cast a ballot in at least six years and that 71 per cent of students who earned D grades in high school later recall getting higher marks. This behaviour is also seen in the stock market, with investors remembering their losses as smaller or their gains as bigger than they actually were.
     Options data indicates that maximum Call open interest is at 19,500 strike, followed by 18,600 and 18,500 strikes. To make a decisive move beyond the 18,600-18,700 band and touch lifetime highs, Nifty needs to break out of this resistance level. If this happens, the market could witness a major rally in the near future.