Week Ending December 27th 2024

Dear patrons, let me first apologize for not being able to write this blog for last week. Markets remained subdued in the truncated week even though it was an expiry week for the December series derivatives contracts. Nifty managed to gain close to 1% over the week, whereas BankNifty also gained more than 1%.

After touching 24800 in the first week of December, Nifty lost momentum falling well below 24000 mark and closed the last week tad above 23800. Fall in Nifty can mainly be attributed to the falling Rupee. The INR has been falling for some time now against the USD and is currently at record low levels.

Solid rally in CY24 faltered in Q4 due to weak earnings, FII selling, and a stronger U.S. Dollar. With mid-cycle slowdown and earnings growth moderation in FY25, indices may consolidate, and sector rotation is expected. However, we believe India's economy remains on track for multi-year growth driven by real estate revival, strong infrastructure activities, and rising corporate capex. Interest rate cuts are expected to boost consumption, reflecting in corporate earnings.

Market momentum remains weak with only 25% of stocks above the 20 EMA and many below the 50 EMA. It is advisable to wait for stability and momentum to return. A pre-budget rally may begin post Uttarayan/Makar Sankranti. In the mean, one can use this time for study and analysis.

Let's take a look at the charts and try to figure out what lies in store for the coming week.

As we can see in the above pic. Nifty spent the entire week in a small range. It squandered all the gains in early trade Friday. We believe Nifty to remain in consolidation phase for some more time. Resistance for Nifty is placed around 24000 to start with and 24300-24350 thereafter. A break above 24350 should lead Nifty higher. Support for Nifty lies around 23700
and move below this support may lead Nifty towards recent lows of around 23200. 

BankNifty also spent the week doing nothing. We expect BankNifty to consolidate between 50500 and 51500 for some time. It may face resistance in 51600-51800 range while support lies around 50500. Break above 52600 is needed for BankNifty to move upwards while break below 50500 may lead it towards 48000 levels.

Sectoral rotation may happen during this phase of consolidation. It is advisable for traders to look for opportunities in such rotation. In our view Capital Goods, Pharma and Consumer Durables should outperform the benchmark indices.

Investing demands smart work and patience, while trading requires hard work and emotional control. Don't mistake trading for an easy wealth path. Understand the difference and choose wisely.

Stay Invested!!!

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. 

Week Ending December 13th December 2024

Dear patrons, after spending the first four days in a tight range of 200 points between 24700 and 24500, Nifty had a violent move on either side on Friday to close almost 1% in the green. Nifty also gained mildly for the week. 

Globally, markets were stable with both the Nasdaq making new highs and Dow closing negative. European indices got a boost in the form of rate cut of 25 bps by the ECB effective 18th December.

Last week we tried to define the need for technical analysis. Let us delve into the secrete of becoming a successful trader. To become a successful trader on must adhere to some rules and strategize for profit maximization.

1: Strategy rule for trading: ✓ Define your entry trigger. ✓ Define your exit triggers. ✓ Define a daily target. ✓ Define a daily loss limit. 

2: Money management: ✓ How much capital are you willing to risk? ✓ How much are you capable of losing? ✓ Determine a risk reward ratio. ✓ Think and plan for profits. 

3: Psychology: ✓ Keep track of your feelings, throughout any trading session. ✓ Don't hesitate to trade at a loss. ✓ Don't be overconfident after a winning strike. ✓ Be attentive to the market signals. 

4: Tools: ✓ What indicators do you use? ✓ What tools do you use for analysis? ✓ What tools do you use for risk management?

The key to becoming a successful trader is how strictly one follows the rules.

Let's take a look at technicals and try to figure out what is in store for next week.

Nifty managed to hold onto the important support level of 24500 and closed handsomely positive. For the coming week Nifty has resistance around 25100. Move above this level should take Nifty further upwards towards new lifetime high. Support for Nifty is placed around 24450-24250 range followed by 24000-23800.

BankNifty also spent first four days in a tight range and saw huge swings on Friday. After a plunge of almost 1000 points BankNifty managed to pull back and erased all losses to close around 0.75% in the green. Resistance for BankNifty is placed around 54000, while support lies around 52700. In all likelihood BankNifty should move beyond its recent high levels in coming days.

Traders should have ample trading opportunity on either side. Markets may, however face shortage of volumes and trading activity may remain dull.

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. 

Week Ending December 06th 2024

Dear patrons, in a news heavy week bulls came into their own and had a fabulous rally ending the week more than 2% in the green. As expected BankNifty riding on PSB performance lead the rally. Most of the PSBs outperformed the broader market to propel the BankNifty beyond 53000 levels.

The MPC (Monetary Policy Committee) of the RBI met last week and announced its decision. We had mentioned in the previous blog that it is high time for the RBI to reduce interest rates and provide impetus to growth. The RBI, although did not cut rates but infused liquidity in the form of cut in CRR (Cash Reserve Ratio) for banks by 50 bps. We believe it is the first step towards rate cuts in next meet.

In yet another news the IMF (International Monetary Fund) has estimated that India can become 4th largest economy in the World in 2025 itself.

We have been trying to figure out market movements using technical analysis for a long time now. Let us see why technical analysis is important in formulating strategy for trading in the markets.

Technical analysis outshines fundamental analysis by focusing on real market behavior, recognizing patterns in historical price and volume data to predict future movements. Unlike theoretical models, which often miss the influence of trader psychology, technical analysis captures market dynamics by closing the gap between theoretical projections and actual market action. By examining recurring patterns, traders can anticipate price movements more accurately. Additionally, its flexibility across timeframes from short-term to long-term trends, enables traders to exploit opportunities tailored to their risk tolerance and trading style. In short, technical analysis provides a pragmatic, actionable framework for predicting price movements.

Let's take a look at charts and try to figure out what lies in store for the coming week.

Nifty managed to sustain above the important level 24300 and zoomed past 24800 on Friday. However, it failed to close above its resistance around 24800. Nifty is currently in a upward moving channel with support around 24500 followed by strong support around 24325. As long as Nifty manages to stay above 24300 it remains a "Buy-On Dips" market. Immediate resistance for Nifty is placed around 24800 and a strong resistance happens to be around 25100 range. A break above 25100 should take the Nifty towards recent highs and further.

Coming to BankNifty, we have been consistently bullish on BankNifty for last couple of weeks (you may read it here Weekly Market Update: Week Ending November 29th 2024). BankNifty was stronger of the benchmark indices, gaining almost 3% over the week. It remains in touching distance to all time high levels and we believe it is only a matter of time before BankNifty moves towards 55000+ levels. Immediate support for BankNifty 52700 while resistance is placed around 54000-54200.

Mantra as usual remains the same. Look to accumulate good quality stocks in every dip and STAY INVESTED.

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. 

Week Ending November 29th 2024

Dear patrons, in the week gone by, we saw some very volatile moves in the markets owing to monthly expiry of the November derivatives contracts. Benchmark Nifty managed to gain almost 1% over the week. There was a steady news flow in the week, which made the markets oscillate between 24350 and 23900. We will look at the news one by one.

Firstly, there was a ceasefire declaration between the warring sides i.e. Israel and the Hezbullah. Any ceasefire across the globe is always a good omen for the markets. Immediate impact of this ceasefire was seen in crude oil price softening.

Another war, between Russia and Ukraine is also on the cusp of ending. The Ukrainian president has shown eagerness towards ending the war. Change in US presidency is definitely taking effect around the World.

Domestically, GDP growth for Q2 FY25 reduced to 5.4% from 6.7% for Q1 FY25. One of the reasons for this slowdown, is the code of conduct for the general elections in Summer. Government spending came to a standstill during the code of conduct, which played a major role in this slowdown. The numbers tend to have a laggard effect, that is the reason for a slowdown in Q2 whereas the code of conduct was in place for most of Q1. We believe stage is set for the RBI to act on the interest rate side and reduce rates as soon as possible to provide impetus to industrial growth. We have been in a high-interest rate regime for too long and now is the time to push for growth.

Globally, the US markets have been making new lifetime highs every alternate day. With the new president taking office in January, we believe the US markets will remain quite buoyant for some more time. There may be some dampeners like tightening of government spending, increase in tariffs, which, may act negatively for emerging markets.

Back home the Maharashtra elections outcome should have some more positive impact on the markets as we expect a surge in capex by the state government. Implementation of various infrastructure project looks on the cards, boosting the state economy as well as the markets.

Technically Nifty is in the process of bottom formation. We had mentioned in the previous blog that a close above 24350 will be the first indicator of getting out of the woods, you may read it here (https://amitbajare.blogspot.com/2024/11/week-ending-november-22nd-2024.html). Nifty crossed 24350 on a couple of occasions during the week, but could not close above and retracted towards 23800 on expiry day. On the last session of the week, we did see some buying and Nifty managed to close with almost 1% gain. For the coming week, we expect 24300 to act as a major hurdle and a close above this level is warranted for further up move. If Nifty manages to move above 24300 then 24750-24800 should act as resistance. 24000 should be the first support followed by 23600.

Coming to BankNifty, we had stated that it is likely to show some fireworks on the upside. BankNifty managed to gain almost 2% for the week. With immediate support around 51700, BankNifty is likely to move upwards with positive momentum largely in PSBs. 52700 should act as resistance. Close above 52700 will propel the BankNifty towards new lifetime highs.

Some of the sectoral indices were badly hit during the week, like the NiftyIT. We believe it provides a great opportunity to look for attractive investments in this sector. The Auto sector has been the major drag for some time now. Looking for some attractive opportunities in this sector can prove very fruitful in time to come. The broader markets outperformed the indices to a larger extent in both directions. Ample opportunity is available in the mid and small cap space.

Mantra, as always remains "accumulate good quality stocks in every fall" and "STAY INVESTED"

“The key to making money in stocks is not to get scared out of them” ~ Peter Lynch

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. 

Week Ending November 22nd 2024

Dear patrons, in a truncated week, bulls finally came into their own and handed over a thumping to the bears. Nifty gained over 2% on Friday to close a timid week in the green. Other indices followed suit with the IT index gaining handsomely.

Global markets were mostly positive, with the US markets leading the way. Election rally is still ON in the US and may well last a bit longer. The US markets seem to be ignoring the rising bond yields and strengthening $. 

Domestically there was stock specific action in Adani group of companies, which resulted in some negative move on Tuesday. Some New York court has indicted the group for alleged corruption in India. In our view the US court has no locus standi in Indian affairs and the US court ruling deserves to go to only one place and that is the DUSTBIN. The markets also shrugged off the negative news and zoomed towards 24000 on the Nifty towards end of the week.

As per Dow theory "market discounts any information" was on the fore Friday. Election results in Maharashtra were expected to be favorable to the ruling parties, which bolstered the investor confidence resulting in a handsome gain. There may still be some more legs to the rally as results have come out better than expected.

Let's try and figure out what lies in store for the coming week.

As we can see in the above chart, Nifty after breaking 23800 had a sharp fall as suggested in the previous blogs. We had also mentioned that 23200 should act as a support (you may read about it here Weekly Market Update: Week Ending November 15th 2024). After breaching 23800 Nifty fell sharply and made a low around 23250. After Friday's pull back 24050-24100 should act as resistance. A close above 24350 will be the first sign that we are out of the woods and a fresh rally can be seen. 23500 should act as support followed by 23200 as strong support in the short term.

BankNifty also registered some gain on Friday but lagged far behind the Nifty. It has closed above the crucial 51000 level. Immediate support for BankNifty lies around 50800 and strong support lies around 49900. On the upside BankNifty looks set for some fireworks. Resistance for BankNifty is placed around 51500-51600 levels followed by 52100-52200 for the coming week.

Action is expected to be stock specific for some more time. Accumulating good quality stocks should reap handsome rewards in coming time.

Stay Invested!!!

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.  

Week Ending November 15th 2024

Dear patrons, the Indian markets faced yet another week of sell off and lost more than 2% in a truncated week. So far the benchmark Nifty has lost close to 10% from its all-time highs. Dampener for last week was the CPI (Consumer Price Index) data. Inflation is seen inching upwards, delaying any interest rate cuts by the RBI.

Globally, the US markets were a mixed bag for the week. Rising for the first half and falling on account of profit booking in second half. Most of the markets around the globe were also following the US markets. Bond yields in the US are rising along with a rise in the dollar index. Rising bond yields is a worrying sign for the markets.

Domestically, IIP (index of Industrial Production) data was seen positive with a rise of 3.1% compared to contraction of 0.1% the previous month. Although the IIP is positive the markets failed to be enthused by this. Some of the reasons for consistent fall in the Indian markets may be enumerated as follows.

1. 75% of small caps and midcaps remain expensive despite corrections. 

2. IPO market absorbed Rs. 48,000 cr., impacting liquidity. 

3. FIIs sold Rs. 1,43,888 cr. between 1st October and 14th November. 

4. Post-tax returns declined due to higher STT and taxes. 

5. Rising US bond yields and dollar index spikes. 

6. Inflation hindered RBI’s ability to cut rates in 2024. 

7. FIIs shifted to cheaper markets like China and Japan. 

8. Rupee at all-time low and economic slowdown persists. 

9. Recession fears and market dynamics led to delivery selling. 

10. Lack of government action or positive statements despite hefty corrections alongside weak PSU Q2 and H1 results.

Let's take a look at what transpired over the week gone by and what lies in store for the coming week.

As we can see in the above pic. Nifty closed in the red on all sessions for the week, losing more than 600 points in 4 days. We had mentioned in the previous blog that a move below 23800 should open more downside for the Nifty (you may read it here Weekly Market Update: Week Ending 08th November 2024). It has taken support around its 200 EMA which, we are afraid may not hold for long. Nifty has an uphill task for the coming week. Technical indicators are showing some more downside. Fibonacci suggests that there should be support around 23200. A close below 23200 will be more worrisome for the bulls, leading to a heavy decline towards June 2024 levels. On the upside 23900 should act as first hurdle followed by 24200.

BankNifty, like Nifty has taken support around its 200 EMA. 49900 should act as a support followed by Fibonacci support of around 49300. A silver lining in BankNifty charts is the RSI is showing some divergence. 51000-51200 range should act as resistance for BankNifty for the coming week. Close below 49300 may lead BankNifty down towards June 2024 levels.

FIIs have been sellers over the last two months, shifting focus to China from India. However, towards the end of the week CLSA has come out with a communique indicating change in stance and refocusing on India. We would like to believe that this is the light at the end of the tunnel, and we may soon see reversal in Indian markets.

In the mean, accumulating good quality stocks may be continued. We believe, in the long run Indian markets should outperform its peers by a considerable margin.

Stay Invested!!!

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.  

Week Ending 08th November 2024

Dear patrons, in a news heavy week Indian markets failed to be enthused by good news and saw heavy selling amidst high octane rally in global markets. Benchmark Nifty squandered all gains made at the start of the week to close mildly in the red for the week. BankNifty also lost its momentum even after good set of numbers posted by banking behemoth SBI.

Globally, the US markets were exuberant after the US presidential election results and a subsequent rate cut by the Federal Reserve. Election of Donald Trump is expected to bring peace in the World and focus on growth in World'd biggest economy. All markets barring India reacted positively to his election.

Some of the reasons for Indian markets going down can be enumerated as follows.

1.The main reasons for the market decline include continuous aggressive selling by foreign investors, who sold Rs. 1,34,203 cr. from 1st Oct to 8th Nov. FII's have reduced 2.5% of their holdings since September, consuming nearly 50% of the liquidity. 

2. Corporate earnings have decreased for two consecutive quarters. 

3. Maharashtra's election as the business capital state in India adds further uncertainty. 

4. The PE of most sectors, except banking, is expensive, and most PSU companies have reported weak results. 

5. A large number of new IPOs and SMEs have been filed, reducing liquidity. 

6. The RBI has maintained a neutral stance on interest rates and tightened liquidity amid rising inflation. 

7. Slowdown in both urban and rural growth. 

8. Many stocks remain overpriced. 

9. Disruptions in the export-import supply chain. 

As we had mentioned in previous couple of blogs, 24500 remains unsurmountable for the Nifty. 24500 still remains a very stiff resistance for Nifty and going forward it looks unlikely that this resistance will be broken in a hurry. Also as discussed previously, 23800 is acting as strong support. A break below 23800 may open the flood gates for Nifty and a sharp fall looms large. On the upside, a break above 24500 (preferably a close above 24500) is expected to lead the Nifty towards 24900-25000 range.

BankNifty has remained subdued in all the carnage Nifty has seen over last 5 weeks. 52400-52500 is acting as resistance for BankNifty, while 51000 still remains very strong support. Banking giant SBI has delivered a good set of numbers and is likely to lend support to BankNifty going forward.

We expect the markets to remain in a broad range of 23800-24500 for some more time. Only a break above or below this range will lend any movement in Nifty. Our focus for last couple of months has been on stock specific move and we maintain this stand. Stocks are likely to perform better than the indices on either side. Wild swings in stocks depending on numbers can't be ruled out. The result season is however over, and we are likely to witness follow on action in many stocks.

What to do? While a slight decline in share prices is possible, a time correction is expected. The market may remain sideways for the next 2-3 months, making this a golden opportunity to invest systematically in fundamentally strong companies with promising H1 and H2 results.

Stay Invested!!!

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.  

Week Ending November 1st 2024

Dear patrons, the festive mood across the country failed to enthuse Indian markets. The markets spent last week consolidating in a tight range of 24100-24500. Nifty failed to conquer 24500 in multiple attempts as predicted in the previous blog (you may read it here Weekly Market Update: Week Ending October 25th 2024) and closed the week around 24300.

World over markets have been quite buoyant, with the US markets scaling new heights on multiple occasions. European markets also edged higher over the week. Indian markets have on the other hand been consistently underperforming global peers for almost couple of months due onslaught of selling by the FIIs.

Outcome of US elections is likely to drive markets in coming weeks with no major economic activity by central banks. Geopolitical situation remains volatile and major impact on crude oil prices is visible.

Automotive companies declared auto sell numbers on the 1st and most of them were pretty encouraging. Rise in auto sells can be attributed to the festive season. GST collection for the month of October increased by 8.9% Y-O-Y indicating much better economic performance than anticipated. 

The recent decline in the small and mid-cap segment of the Indian stock market results from several key factors

1) Weak earnings: Many results announced until 31st October were flat or negative affecting investor sentiment compounded by aggressive FII selling throughout October 2024. 

2) SEBI's new collateral regulations: New rules have drastically reduced the stocks eligible for collateral, limiting leverage for traders and investors. 

3) Margin calls and forced liquidations: The lower leverage led to margin calls, forcing investors to liquidate positions and intensifying the sell-off. 

4) Impact on HNIs: High-Net-Worth Individuals, often leveraging their investments, faced challenges as many holdings became ineligible as collateral. 

5) Potential implications: Short-term volatility is likely as investors adjust to new regulations and process earnings impacts while corporate governance practices among small and mid-cap companies may come under scrutiny. 

6) Long-term opportunities: Despite short-term uncertainties, the Indian economy's long-term prospects remain positive with potential buying opportunities arising from the recent correction.

Let's take a look at charts and try to figure out future trend in the benchmark indices.

As we can see Nifty spend time consolidating above 24000 levels. Resistance for Nifty is placed around 24500. 24000-23800 should act as support for the coming week. Break below 24000 may lead to further downside towards 23200. Break above 24900 should propel the Nifty towards new highs in a jiffy. FIIs pulled out more than Rs. 1 lac crore from Indian markets resulting to almost 10% fall from recent highs. Retail Indian investors along with DIIs managed to counter this selling with almost equal buying. 

BankNifty remained more resilient for the past week. Move above 52400 may lead the BankNifty towards recent highs and further. 51000 remains very strong support for BankNifty whereas 52000-52100 should act as resistance. BankNifty may lead the next rally in the markets, taking Nifty in tandem. Some of the PSU banks are looking very attractive in the near term.

We are still bullish on the markets and anticipate reversal in the tide in favor of bulls sooner than later. Making money in the markets will become a tad difficult compared to last year. Rigorous study and adhering to a strict trading framework is the only counter to rising volatility in the markets.

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.  

Week Ending October 25th 2024

Dear patrons, it was a bad week for bulls, as bears took full control of the Indian markets and plummeted almost all stocks to the lowest levels in recent times. Foreign Institutional Investors have been selling Indian stocks consistently for last month or so while Domestic Institutions are buyers. 

A question arising in all investors' mind, why this selling by FIIs? Let's try to enumerate the points leading to this selling.

• Global instability is a major concern. Particularly tensions in the middle east. The middle East war is having an adverse impact on behavior of Crude Oil prices, causing further unrest for the investors.
• US Elections are making FIIs jittery and they are being safe with hands on cash. Wait and watch looks to be their strategy till new Government is formed in the US.
• Increase in Capital Gains Tax in India has had a big impact on FII outflow.
• Changes in policy by SEBI for derivatives markets. Stricter norms and uneven ASM criteria also play a major role.

US markets have been topsy turvy over last week, closing positive one day and negative one day. Global markets have been in good shape over last week. European indices remained mostly positive.

Let's have a look at technical charts and try to figure out what lies in store for the coming week.

Nifty could not cross 25000 and reversed sharply over the week. In a vicious bout of selling levels tend to lose sanctity. However, we should not ignore levels. Nifty has resistance 24500-24600 range. Only a move above 24900 will reverse the current negative trend. Support for Nifty is placed around 23800-23700 range.

BankNifty has fared better than Nifty in all the mayhem. 51000 did hold till Friday, but eventually fell on weak numbers by some of the banks. BankNifty should find support around 50200-50100. Resistance for BankNifty lies around 51100-51200 levels. Late surge in BankNifty on Friday and a good set of numbers by ICICIBANK, particularly the asset quality should keep BankNifty buoyant, and it may move northwards.

Markets have corrected by around 10% from life-time high levels. We may be in for a relief rally in the markets over next few days. As long as Nifty remains below 25000 it is a "Sell On Rise" market.

Investors should look to accumulate good quality stocks in this fall. Evry dip should be utilized for acquiring more good quality stocks.

Mantra remains the same "STAY INVESTED"

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.  

Week Ending October 18th 2024

Dear patrons, Indian bourses staged a comeback on the last trading session of the week after losing close to 2% on benchmark indices. Nifty started the week on a positive note but could not sustain as bears upped the ante and took complete control over next three sessions. On the final trading day of the week, however, after losing quite heavily at the start markets saw buying and erased all the losses to close positive.

Results season is one of the main contributors to the topsy turvy nature of the markets over last week. As stated in the previous blog action shifted to stocks and we saw huge swings in specific stocks, depending on their quarterly results. Q2 results, as expected, have been dampeners for the markets. Many of the big wigs have not been able to perform as per market expectations and were plummeted heavily after results. On the other hand, companies with good set of numbers were rewarded with the same vigor.

Some other factors that lead to fall 

1. Trade deficit widened to $ 29.7 bn in August compared to $ 24.2 bn a year ago.

2. Merchandise exports fell to $ 34.7 bn in August from $ 38.3 bn a year ago.

3. Manufacturing as well as services PMI (Purchasing Manager's Index) fell to multi month lows.

4. GST collection rose by 6.5% in September, clocking slowest growth in 40 months.

5. INR fell to historic lows against USD.

All these indicators point to growth slowdown. However, we still believe that most of the corrective phase in the markets is over and markets are in the process of near-term bottom formation. In the short term it looks like, there should be a recovery to certain extent.

Let's take a look at benchmark indices and try to analyze what lies in store for the coming week.

As we had stated in the previous blog 24700-24500 acted as support. Nifty made a low of 24567 and reversed sharply towards 24900. For the coming week 25000-25200 range should act as resistance while 24500-24400 should be strong support range. We reiterate that "as long as Nifty remains below 25500 it is Sell-On-Rise". First signs are visible on charts for an up move towards 25150. Nifty will find it extremely difficult to cross 25500.

BankNifty on the other hand remained quite strong and did not move below all important level of 51000 for the entire week. We had clearly mentioned 51000 as crucial support for BankNifty in last couple of blogs. BankNifty was the main driver of the Friday rally in the markets. It managed to close above 52000 for the week owing to positive result by Axis Bank. 52300 should act as resistance for BankNifty beyond which 52800 is major hurdle. On the downside 51700 should act as support.

Broader markets have seen a significant correction, and many mid and small cap stocks are quoting at attractive valuations. Investment in selective good quality stocks in the mid and small cap space can be considered.

FII's have been sellers for the entire month of October so far. We have seen record selling by FIIs this month, but DIIs have digested all the selling and prevented markets from falling more than 5% in this period. We believe, the foreign investors will return to buying Indian equity sooner than later.

"Investors must keep in mind that there’s a difference between a good company and a good stock. After all, you can buy a good car but pay too much for it.” ~ Richard Thaler

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.  

Week Ending October 10th 2024

Dear patrons; after suffering heavy losses in the first week of October, markets consolidated in a tight range to end the second week slightly lower. Consistent selling by Foreign Institutional Investors led to the fall, although Domestic Institutions were buyers in the falling markets.

On geopolitical front, situation remains quite volatile between the fighting countries. Geopolitical tensions continue to keep crude oil on the boil. Crude approaching close to $ 80/barrel jeopardizes growth in emerging economies like India. Also, rising crude is likely to have an adverse impact on inflation, key driver in deciding interest rates for most of the Western World.

FIIs have remained sellers for last couple of weeks in Indian markets, as some drastic steps by the Chinese government on economic front is likely to result in better growth, making China a preferred investment destination for FIIs. We believe that this scenario is temporary and FIIs should return to Indian markets sooner than later.

In other news Corporate Income Tax in India rose more than 11% Y-o-Y to 494697 lakh and personal Income Tax rose by almost 23% to 598484 lakh. The rise in Income Tax collection is testimony to our belief that the Indian economy is in good shape and growing gradually, out pacing its peers.

October brings start of the Q2 results. Tata group giant TCS kicked off the result season on a somber note. We believe, it would be difficult for many corporates to repeat their performance this quarter. 

As is evident from the above pic, Nifty consolidated in a tight range for the week with a negative bias. Nifty faces hurdle in 25150-25300 range. 24700-24500 range should act as support for Nifty for the coming week. We expect markets to remain range bound and action to more stock specific. As long as Nifty remains below 25500 it is "Sell-On-Rise" market. A breakout above 25500 is needed for Nifty to move northwards.

BankNifty is trying hard to keep head above the very crucial 51000 level. It managed to close above this all-important level on all days after closing below 51000 Monday. BankNifty is likely to face resistance around 51600 and 52000 thereafter. A move above 52000 should make ground clear for BankNifty to move towards new highs.

As stated previously, we believe action to remain stock specific. Traders may focus towards stocks instead of indices. Waiting for a clear breakout or breakdown should prove to be most prudent strategy. In the mean identification of good quality stocks can be undertaken.

Investors should take opportunity to buy good quality stocks on every dip in the markets and stay Invested.

"Hastily taken decisions always result in heavy losses. Take your time before putting money in any stock." ~ Rakesh Jhunjhunwala

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.  

Week Ending October 4th 2024

Dear patrons, finally the Indian markets witnessed some sort of selling over last week with benchmark indices losing more than 4% in a truncated week. Rest of the world remained steady with a positive bias, but domestic markets went into a bear grip due to geopolitical as well as regulatory action.

Geopolitically, entire world is on a fragile ground. Tension brewing in the middle east played the spoil sport in a raging bull market leading to some selling in global as well as domestic markets. Real action in Indian markets was on account of SEBI's new guidelines for regulation of the derivatives markets. NSE (National Stocke Exchange) is the World's biggest derivatives market and contributes almost 80% of the daily turnover. The fear that new regulatory framework may lead to exit of retail traders from derivatives markets spooked the markets and lead to big falls on consecutive sessions.

Tension in middle east also played its part in spoiling mood in the markets. First casualty of the looming "World War 3" was crude oil. Crude prices spiked up by almost 5% as soon as the news of new offensive came out. Rise in crude prices particularly hampers India's economy, as crude oil imports is the biggest bill for the Indian exchequer. 

Coming to some good news, GST collection for the month of September saw a 6.5% rise year-on-year, testimony to the better health of the Indian economy. We believe that the festive season in near future will provide further impetus to consumer spending and lead to higher GST collection. 

As we can see Nifty has closed below the support of rising channel, which suggest that there may be some more downside remaining. Immediate support on Fibonacci is place around 24800. Other indicators also suggest support around 24800-24900. Close below 24800 may open door for further down move towards 24300. If Nifty manages to turn around and move upwards 25500-25600 will act as resistance zone. 

BankNifty has closed just a tad below its major support on Fibonacci. BankNifty is making a flag pattern and has witnessed a breach on the downside. Next strong support for BankNifty is placed around 51000. Close below 51000 may lead to further downward movement. If BankNifty stages a turnaround, resistance is placed around 52600-52700 range.

Traders may look for opportunities in beaten down stocks for some quick gain. Indian markets have been very resilient in the near past and are likely to act in the same way in future as well. Adhering to strict stop losses on either side will prove to be a blessing in disguise.

FIIs have been heavy sellers in the last week but were matched by the DIIs with the same fervor. Lot of money is on the sidelines in Indian markets and this liquidity should lead the way forward.

It is a God send opportunity for investors. Investors should look to accumulate good quality stocks in every dip. In the long run the Indian equity markets look robust and should outperform their global peers by some distance.

STAY INVESTED!!!

"Invest for the long haul. Don't get too greedy and don't get too scared" ~ Shelby M. C. Davis

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.  

Week Ending September 27th 2024

Dear patrons; it has been a bull ride for the markets over the last few weeks and it is only gaining strength with passing time. Benchmark indices were on a roll for most of the week, clocking new lifetime high levels for most of the week.

In a slow news week bulls were at their ferocious best taking Nifty beyond 26000 mostly on the back of short covering owing to September series derivatives expiry. Surge in markets can also be attributed to incessant flow of money from domestic investors. Liquidity is no problem for the Indian markets as global bankers are in the process of reducing interest rates, thereby infusing a lot of liquidity in the financial system.

Global markets were also pretty buoyant and made new lifetime highs all over. Reduction in interest rates have sparked new optimism for growth across the globe resulting in strong bull runs.

Domestically, everything looks calm and optimistic on the economic front. As the festive season sets on there should be more spending by consumers leading to record tax collection for the government and record sells for consumer durables, FMCG and two-wheeler makers. Global expenditure on IT should also increase with reducing interest rates.

Let us take a look at what happened on technical front on indices and try to figure out what lies in store.

As stated in the previous blog Nifty staged a superb rally gaining more than 1.5% over the week. Nothing is amiss on charts as far as the uptrend is concerned. Markets may consolidate in the coming weeks with range bound moves within a small band. It has support around 25900 and resistance around 26400-26500, Almost all parameters on the charts are indicating some more upside.

After a bit of consolidation BankNifty also surged over last couple of weeks to post another lifetime high. It witnessed some profit booking on Friday. Stage looks set for BankNifty for yet another lifetime high. PSU banks are looking promising for the coming weeks.

In a truncated week market may behave erratically and with higher volatility. Traders should adhere to strict stop losses. Booking small profits and reentering the trade may remain flavor of the week.

Investors should look to accumulated good quality stocks and stay invested.

You never know what kind of setup market will present to you, your objective should be to find opportunity where risk reward ratio is best. ~ Jaymin Shah

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.

Week Ending September 13th 2024

Dear patrons, markets staged a superb comeback after a sharp and swift down move ending the week on a high. Indian markets have made it a habit of bouncing back with a greater ferocity after every fall. The latest bounce may be attributed to short covering on account of Nifty weekly expiry.

We did anticipate this up move in our last blog, where we had mentioned, Nifty moving to newer highs once it moves past 25200, and lo and behold it did zoom past 25400 within an hour of going past 25200. You may read it here ((Weekly Market Update: Week Ending 06th September 2024 (amitbajare.blogspot.com))

It was a slow news week for the markets. On the penultimate day of the week the European Central Bank cut interest rates by 25 bps to 3.50%. We had also predicted that all global bankers would start cutting rates ones there is a cut by the Federal Reserve of the US. The EU has gone one step ahead and cut rates as soon as a clear indication of rate cuts in the US came to the fore. Economic growth across the globe has dwindled across sectors and it becomes imperative for bankers worldwide to initiate action on interest rate front. 

Domestically for the second time in succession the CPI (Consumer Price Index) stayed below 4% to 3.65%, second best in almost 5 years. The level of CPI is comfortably below RBI's 4% mark. The IIP (Index of Industrial Production) also grew slightly to 4.8% against 4.7% earlier. The numbers are a testimony to India's robust growth despite challenges across the globe. We believe the impending rate cuts should bolster the economic activity in India and provide further impetus to growth. Influx of liquidity owing to rate cuts should reflect in higher allocation to risky assets like stocks resulting in further strengthening of an already bullish market.

Let's now take a look at technicals and try to figure out what lies in store for the coming week.

Nifty has made a new lifetime high last week. We are comfortably placed on most parameters for further up move on Nifty for the coming week. Support for Nifty lies around 25100-25200 range. As long as Nifty remains above 24900, it is a "Buy-On-Dips" market. Nifty is likely to move northwards for the first half of the week. Resistance is placed around 25500-25600 range. News flow after the Fed Interest Rate decision on 18th September will decide further move in the market. 

BankNifty also performed decently well last week. It will be the most impacted index after the Fed Rate cut. The picture looks good for some more up move in the coming week. Support for BankNifty lies around 51400-51200 range while resistance is placed around 52000-52300 range. A close above 52300 may propel BankNifty towards 53000 in a hurry.

Traders are advised to exercise caution with optimism. The old adage "Buy on rumor, sell on news" may well be kept at the back of the mind. Adhere to strict stop losses on either side. The moves may be wild and volatile. There may a spurt in volatility, particularly in banking stocks. Carrying leveraged position overnight may be risky in the coming week. There may be gap up or gap down opening in the market on multiple occasions.

Investors may look to accumulate certain good quality stocks in every dip.

Stay Invested!!!

“The goal of a successful trader is to make the best trades. Money is secondary.”~ Alexander Elder

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.

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Week Ending 06th September 2024

Dear patrons, wishing you all a very happy "Ganeshotsav". May Lord Ganesha's divine blessings bring you eternal happiness and peace, protect you from evil, and fulfill all your dreams and desires.

After a steady start to the week markets world over lost upward momentum and by the end of the week were fully gripped by the bears. Large sell offs took place across the globe, with the US markets leading the fall. Weak numbers over last weekend spooked investors in the US. Sell off in all asset classes happened due to fear of a looming recession in the world's biggest economy. After a big rally in short time markets needed a reason to correct and slight variation in jobs data provided that reason.

All the global markets fell from recent highs in varied quantum. Indian markets also fell sharply on last trading day of the week, after a recovery in mid - week session. Benchmark indices lost more than 1% to end the week on a somber note. We had cautioned in the last blog that aa correction is due and may arrive unexpected and be sharp and swift. (you may read it here Weekly Market Update: Week Ending August 30th 2024 (amitbajare.blogspot.com)).

We believe recessionary fear is unwarranted, particularly for a consumption driven economy like India. Also, this fear brings crude oil prices southwards, which is good news for Indian economy. Indian economy is moving in the right direction and out doing all its competitors by a comprehensive margin. The markets may feel a few jitters over next few days but are likely to recover faster than expected.

Let us now take a look at charts and try to figure out what lies in store for us in the coming week.

As we can see after a very good up move, markets have gone down sharply on Friday. Nifty has closed a tad below its support around 24900. We believe there may be some more pain in store at the start of the week for Nifty, with support around 24600-24500 range. Resistance for Nifty is placed around 25050-25100 levels. A close below 24500 may open doors for further downward movement towards 23800. If Nifty manages to close above 25100, immediate hurdle is placed around 25200, thereafter it is open sky for Nifty to move to new lifetime high levels.

BankNifty didn't do much over last couple of months. However, after a breakout at the start of the week BankNifty gave up gains and was firmly in bear grip. It may find support around 50200-50000 range. If BankNifty closes below 50000 more downward movement can't be ruled out for much lower levels.

We believe markets to trade with a negative bias for the coming week. Thereafter, as the big event of Fed rate cut comes closer markets should be able to stage a recovery. Markets remain "Buy-On-Dips". Select mid and small cap stocks can be accumulated for short as well as long term.

Keep accumulating good stocks with every dip and stay invested.

“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” ~ Warren Buffet

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.

Week Ending August 30th 2024

Dear patrons, the week gone by belonged entirely to the bulls. Benchmark indices ended the week on a lifetime high for Nifty and Sensex. Nifty gained close to 2% over the week and erased all the losses of the first half of the month. We had already stated about Nifty making new lifetime high in the last week of August (You may read it here Weekly Market Update: Week Ending August 23rd 2024 (amitbajare.blogspot.com)).

News flow over the last week was pretty slow amidst exuberance over the much expected rate cut by the US Federal Reserve. As they say "No news is good news" and it was very evident in the markets. Global markets were very buoyant last week with crude oil prices easing below $ 80 / barrel. Falling crude oil prices along with falling interest rates should infuse a big chunk of liquidity in the system and in turn in the markets.

Domestic GDP numbers were out last week. India's GDP grew by 6.7% against expectation of 6.9%. Fall in GDP has been attributed to fall in Government spending due to elections and model code of conduct. Rating agency Moody's has increased its projected growth of India's GDP to 7.2% for CY 2024. Falling crude oil prices should drive growth in India's GDP as oil accounts for the largest bill to the exchequer. Monsoon has been satisfactory in August and has exceeded its quota in many parts of the country. Agricultural growth seems to be on track with a bumper crop season. GST collection for August rose by 10% to 1.75 lakh crores, testimony to the rising economic activity including consumer spending in India.

Let's now have a look at the charts and try to figure out what lies in store for the coming week.

Nifty moved slowly but steadily towards new lifetime highs as predicted in the last blog. As per the charts Nifty should find support in 25000-24900 range whereas resistance lies around 25500-25600 range. India Vix is comfortably placed for some more upside in the markets. RSI also suggests up move to continue for some more time.

A word of caution for traders. Nifty has closed in the green for consecutive 12 days. All good things come to end, so should this streak of positive closes on Nifty. We may witness a sharp and swift correction any time. Traders should be mindful of this and adhere to strict stop losses and book profits regularly.

Coming to BankNifty, after a subdued last week, it looks a bit fatigued with support around 51000-50900. Close below 50900 may trigger selling and BankNifty may towards 50000-50100 range, which should act as a strong support. On the other hand a close above 51500 may propel BankNifty towards 52400-52500 range.

Markets are "Buy-On-Dips", with every fall, big or small being bought into swiftly. Investors should look to accumulate good quality stocks in every dip.

“Value stocks are about as exciting as watching grass grow, but have you ever noticed just how much your grass grows in a week?”- Christopher Browne

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.