Week Ending November 29th 2024

Dear patrons, in the week gone by, we saw some very volatile moves in the markets owing to monthly expiry of the November derivatives contracts. Benchmark Nifty managed to gain almost 1% over the week. There was a steady news flow in the week, which made the markets oscillate between 24350 and 23900. We will look at the news one by one.

Firstly, there was a ceasefire declaration between the warring sides i.e. Israel and the Hezbullah. Any ceasefire across the globe is always a good omen for the markets. Immediate impact of this ceasefire was seen in crude oil price softening.

Another war, between Russia and Ukraine is also on the cusp of ending. The Ukrainian president has shown eagerness towards ending the war. Change in US presidency is definitely taking effect around the World.

Domestically, GDP growth for Q2 FY25 reduced to 5.4% from 6.7% for Q1 FY25. One of the reasons for this slowdown, is the code of conduct for the general elections in Summer. Government spending came to a standstill during the code of conduct, which played a major role in this slowdown. The numbers tend to have a laggard effect, that is the reason for a slowdown in Q2 whereas the code of conduct was in place for most of Q1. We believe stage is set for the RBI to act on the interest rate side and reduce rates as soon as possible to provide impetus to industrial growth. We have been in a high-interest rate regime for too long and now is the time to push for growth.

Globally, the US markets have been making new lifetime highs every alternate day. With the new president taking office in January, we believe the US markets will remain quite buoyant for some more time. There may be some dampeners like tightening of government spending, increase in tariffs, which, may act negatively for emerging markets.

Back home the Maharashtra elections outcome should have some more positive impact on the markets as we expect a surge in capex by the state government. Implementation of various infrastructure project looks on the cards, boosting the state economy as well as the markets.

Technically Nifty is in the process of bottom formation. We had mentioned in the previous blog that a close above 24350 will be the first indicator of getting out of the woods, you may read it here (https://amitbajare.blogspot.com/2024/11/week-ending-november-22nd-2024.html). Nifty crossed 24350 on a couple of occasions during the week, but could not close above and retracted towards 23800 on expiry day. On the last session of the week, we did see some buying and Nifty managed to close with almost 1% gain. For the coming week, we expect 24300 to act as a major hurdle and a close above this level is warranted for further up move. If Nifty manages to move above 24300 then 24750-24800 should act as resistance. 24000 should be the first support followed by 23600.

Coming to BankNifty, we had stated that it is likely to show some fireworks on the upside. BankNifty managed to gain almost 2% for the week. With immediate support around 51700, BankNifty is likely to move upwards with positive momentum largely in PSBs. 52700 should act as resistance. Close above 52700 will propel the BankNifty towards new lifetime highs.

Some of the sectoral indices were badly hit during the week, like the NiftyIT. We believe it provides a great opportunity to look for attractive investments in this sector. The Auto sector has been the major drag for some time now. Looking for some attractive opportunities in this sector can prove very fruitful in time to come. The broader markets outperformed the indices to a larger extent in both directions. Ample opportunity is available in the mid and small cap space.

Mantra, as always remains "accumulate good quality stocks in every fall" and "STAY INVESTED"

“The key to making money in stocks is not to get scared out of them” ~ Peter Lynch

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.