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.