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.