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.