Week Ending December 27th 2024

Dear patrons, let me first apologize for not being able to write this blog for last week. Markets remained subdued in the truncated week even though it was an expiry week for the December series derivatives contracts. Nifty managed to gain close to 1% over the week, whereas BankNifty also gained more than 1%.

After touching 24800 in the first week of December, Nifty lost momentum falling well below 24000 mark and closed the last week tad above 23800. Fall in Nifty can mainly be attributed to the falling Rupee. The INR has been falling for some time now against the USD and is currently at record low levels.

Solid rally in CY24 faltered in Q4 due to weak earnings, FII selling, and a stronger U.S. Dollar. With mid-cycle slowdown and earnings growth moderation in FY25, indices may consolidate, and sector rotation is expected. However, we believe India's economy remains on track for multi-year growth driven by real estate revival, strong infrastructure activities, and rising corporate capex. Interest rate cuts are expected to boost consumption, reflecting in corporate earnings.

Market momentum remains weak with only 25% of stocks above the 20 EMA and many below the 50 EMA. It is advisable to wait for stability and momentum to return. A pre-budget rally may begin post Uttarayan/Makar Sankranti. In the mean, one can use this time for study and analysis.

Let's take a look at the charts and try to figure out what lies in store for the coming week.

As we can see in the above pic. Nifty spent the entire week in a small range. It squandered all the gains in early trade Friday. We believe Nifty to remain in consolidation phase for some more time. Resistance for Nifty is placed around 24000 to start with and 24300-24350 thereafter. A break above 24350 should lead Nifty higher. Support for Nifty lies around 23700
and move below this support may lead Nifty towards recent lows of around 23200. 

BankNifty also spent the week doing nothing. We expect BankNifty to consolidate between 50500 and 51500 for some time. It may face resistance in 51600-51800 range while support lies around 50500. Break above 52600 is needed for BankNifty to move upwards while break below 50500 may lead it towards 48000 levels.

Sectoral rotation may happen during this phase of consolidation. It is advisable for traders to look for opportunities in such rotation. In our view Capital Goods, Pharma and Consumer Durables should outperform the benchmark indices.

Investing demands smart work and patience, while trading requires hard work and emotional control. Don't mistake trading for an easy wealth path. Understand the difference and choose wisely.

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 December 13th December 2024

Dear patrons, after spending the first four days in a tight range of 200 points between 24700 and 24500, Nifty had a violent move on either side on Friday to close almost 1% in the green. Nifty also gained mildly for the week. 

Globally, markets were stable with both the Nasdaq making new highs and Dow closing negative. European indices got a boost in the form of rate cut of 25 bps by the ECB effective 18th December.

Last week we tried to define the need for technical analysis. Let us delve into the secrete of becoming a successful trader. To become a successful trader on must adhere to some rules and strategize for profit maximization.

1: Strategy rule for trading: ✓ Define your entry trigger. ✓ Define your exit triggers. ✓ Define a daily target. ✓ Define a daily loss limit. 

2: Money management: ✓ How much capital are you willing to risk? ✓ How much are you capable of losing? ✓ Determine a risk reward ratio. ✓ Think and plan for profits. 

3: Psychology: ✓ Keep track of your feelings, throughout any trading session. ✓ Don't hesitate to trade at a loss. ✓ Don't be overconfident after a winning strike. ✓ Be attentive to the market signals. 

4: Tools: ✓ What indicators do you use? ✓ What tools do you use for analysis? ✓ What tools do you use for risk management?

The key to becoming a successful trader is how strictly one follows the rules.

Let's take a look at technicals and try to figure out what is in store for next week.

Nifty managed to hold onto the important support level of 24500 and closed handsomely positive. For the coming week Nifty has resistance around 25100. Move above this level should take Nifty further upwards towards new lifetime high. Support for Nifty is placed around 24450-24250 range followed by 24000-23800.

BankNifty also spent first four days in a tight range and saw huge swings on Friday. After a plunge of almost 1000 points BankNifty managed to pull back and erased all losses to close around 0.75% in the green. Resistance for BankNifty is placed around 54000, while support lies around 52700. In all likelihood BankNifty should move beyond its recent high levels in coming days.

Traders should have ample trading opportunity on either side. Markets may, however face shortage of volumes and trading activity may remain dull.

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 December 06th 2024

Dear patrons, in a news heavy week bulls came into their own and had a fabulous rally ending the week more than 2% in the green. As expected BankNifty riding on PSB performance lead the rally. Most of the PSBs outperformed the broader market to propel the BankNifty beyond 53000 levels.

The MPC (Monetary Policy Committee) of the RBI met last week and announced its decision. We had mentioned in the previous blog that it is high time for the RBI to reduce interest rates and provide impetus to growth. The RBI, although did not cut rates but infused liquidity in the form of cut in CRR (Cash Reserve Ratio) for banks by 50 bps. We believe it is the first step towards rate cuts in next meet.

In yet another news the IMF (International Monetary Fund) has estimated that India can become 4th largest economy in the World in 2025 itself.

We have been trying to figure out market movements using technical analysis for a long time now. Let us see why technical analysis is important in formulating strategy for trading in the markets.

Technical analysis outshines fundamental analysis by focusing on real market behavior, recognizing patterns in historical price and volume data to predict future movements. Unlike theoretical models, which often miss the influence of trader psychology, technical analysis captures market dynamics by closing the gap between theoretical projections and actual market action. By examining recurring patterns, traders can anticipate price movements more accurately. Additionally, its flexibility across timeframes from short-term to long-term trends, enables traders to exploit opportunities tailored to their risk tolerance and trading style. In short, technical analysis provides a pragmatic, actionable framework for predicting price movements.

Let's take a look at charts and try to figure out what lies in store for the coming week.

Nifty managed to sustain above the important level 24300 and zoomed past 24800 on Friday. However, it failed to close above its resistance around 24800. Nifty is currently in a upward moving channel with support around 24500 followed by strong support around 24325. As long as Nifty manages to stay above 24300 it remains a "Buy-On Dips" market. Immediate resistance for Nifty is placed around 24800 and a strong resistance happens to be around 25100 range. A break above 25100 should take the Nifty towards recent highs and further.

Coming to BankNifty, we have been consistently bullish on BankNifty for last couple of weeks (you may read it here Weekly Market Update: Week Ending November 29th 2024). BankNifty was stronger of the benchmark indices, gaining almost 3% over the week. It remains in touching distance to all time high levels and we believe it is only a matter of time before BankNifty moves towards 55000+ levels. Immediate support for BankNifty 52700 while resistance is placed around 54000-54200.

Mantra as usual remains the same. Look to accumulate good quality stocks in every dip and 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.