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.