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.