Week Ending 17th March 2023

Dear patrons, welcome to yet another edition of weekly update on the stock markets. The markets lost significant ground over the past week. We have been suggesting a fall in the markets since the start of the month and our strategy of sell on rise is proving to be helpful in handling the volatile markets.

As we had mentioned in the last blog the markets have shown weakness and lost ground swiftly. On the last trading day however, the indices rose towards the close and managed close above 17000 on the Nifty. This rise in the indices is on the back of short covering and not long build up. 

Indian WPI (Wholesale Price Index) and CPI (Consumer Price Index) data was released last week. The CPI eased just a tad bit from 6.52 to 6.44 and the WPI saw healthy fall from 4.73 to 3.85, The WPI is at 25 months low. The fall in the WPI suggests that the RBI's decision of raising interest rates is yielding fruits and providing comfort to the economy. Softening of the inflation may also lead to halt in interest rate rise and the RBI may hold status quo.

The main driver behind the fall last week was the failure of banks in the USA. One of the biggest banks in the US, the Sillicon Valley Bank, has collapsed and is taken over by the regulators, sending shockwaves through the US markets. The fall of the Sillicon Valley Bank was followed by fall of two more banks, showing all is not well in the World's largest economy. The interest rate hikes have failed to contain the inflation, on the contrary it has sucked out liquidity leading to failure of banks. Some more disasters might be in the waiting in US. You can read more about the Sillicon Valley Bank failure here Weekly Market Update: SVB, 2007 REDUX OR AN ABERRATION? (amitbajare.blogspot.com)

Coming back to our markets the Nifty is interestingly positioned around 17100 levels closing down around 2% on weekly basis. What lies ahead for Nifty? Let's try to find out

As we can see in the above chart Nifty tried to regain lost ground and closed in the green on Friday. 17200 should act as first hurdle for Nifty sustaining above which, may take Nifty towards 17400.

The BankNifty also closed in the green on Friday and managed to close above the all important levels of 39000, we had mentioned in the last blog post. 39800 should act as the first barrier for the BankNifty above which, it may move towards 40400.

Markets still remain "Sell On Rise". It would be prudent to book profits in every rise and sit on cash. Even booking small losses and keeping cash ready for deployment in case of fall towards 16600 should be the most fruitful strategy in current market conditions. Markets will provide ample opportunity and time for deployment of funds. One should wait for levels to arrive and take action once levels are achieved. Currently the scene does not look very optimistic to be bullish and blind rush in buying may lead to disaster.

In any case traders should be cautious and adhere to strict stop losses to avoid the agony of losing hard earned money.

"Money is the most egalitarian force in the World, it confers it's powers to whoever holds it" ~ Anonymous  

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.