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.