Week Ending 10th March 2023

Dear patrons, the preceding week was a truncated week on account of Holi, the festival of colors. However, markets saw only one color and that was red. As was indicated in the previous blog Nifty faced stiff resistance around 17800 and retreated towards 17400. The path forward for the month looks a bit tricky and it looks like a herculean task for the Nifty to cross 17800.

The main reason for the fall in Indian markets was the economic unrest around the western world. US Fed chief sees more tightening in future with sharper rate hikes. The US economy is grappling with declines in consumer demand and rising inflation. Rise in inflation is being tackled by increase in interest rates which in turn slows economic growth. Since the US is the biggest consumer in the world any slow down there hampers the global economy. 

India on the other hand is doing exceedingly well. IIP data was released Friday and it saw a jump by 5.2% YoY. This augurs well for the Indian economy and in turn the Indian markets. Over the period of next decade or so India is slated to be among the top 3 economies of the world with a GDP exceeding $10 tn. The current scenario, however, is a dampener in the sentiment and may take time to straighten things out.

Let's now shift focus to the Indian indices. Nifty had a fantastic closing last Friday and managed to add some more gains Monday. Midweek session onwards there was rise in volatility and we witnessed selling across the market breadth. Nifty ended the week around 17400 gaining half a percent or so over the week.

As we can see Nifty could not manage to cross its 100 EMA around 17800 and took a sharp U turn. Nifty is currently trading in a zone where we can't see an immediate support on daily charts. The picture becomes a bit grim if we look at the monthly charts below.

On the monthly charts, Nifty has completed its 3rd wave up and is likely to commence its 4th wave down. The first target for Nifty in the event of fall comes around 16600 and further selling may take it down to 15600-15500 band. The markets are looking jittery and may lose ground swiftly. 

Coming to BankNifty, the situation looks dicey for BankNifty. It failed to sustain above 41500 and saw sharp down move. 

BankNifty has completed its 4th up wave and is poised to move down. BankNifty may move towards 39000 and failing to take support around these levels it may slide towards 37500-37200 range.

Falls in the markets are always swift, traders need to be cautious and nimble footed. As long as Nifty remains below 17800 mark traders should follow sell on rise strategy. 

In the meanwhile, as always keep accumulating good quality stocks in every dip. Staying invested is rewarding over long period of time.

"Courage taught me no matter how bad a crisis gets ... any sound investment will eventually pay off." — Carlos Slim Helu

P.S.: This communication is for educational purpose only and does not recommend buying or selling any stock or index. Trade at your own risk.