Week Ending January 10th 2025

Dear patrons, in the new year bears have been holding a stranglehold on the markets. Barring the first couple of sessions the new year has not been very auspicious for the bulls. In the week gone by markets lost quite a bit of ground again. Benchmark Nifty fell more than 1% while BankNifty fell by more than 4% to end the week in tatters.

Global markets remained subdued last week. The US markets took different directions wherein the Dow Jones moved southwards while Nasdaq moved northwards. Indian markets remained the worst performing for last week. Fall in Indian markets can be attributed to a large extent to the falling INR vs the USD. With interest rates lowering and USD strengthening, US has become a preferred destination for investors compared to a high interest economy like India. We have been consistently saying that interest rates in India are too high to sustain growth.

In all the chaos, there is some glimmer of hope. Quarterly results season has been kicked off spectacularly by TCS. The stock gained more than 5% on the back of good set of numbers and positive outlook for future from the management. Monthly IIP numbers have also moved up pretty sharply from 3.7% to 5.2% growth (MoM). We expect results season to be good this time around on account of festivities in the quarter and even better results are expected next quarter owing to World's biggest festival the "Maha Kumbha Mela". A congregation of close to 50 crore people are expected to happen at the "Kumbha", giving a major fillip to local as well as national economy.

Let's take a look at charts and try to figure out moves for the coming week.

As we can see Nifty moved sharply towards its recent lows last week. 23200 still remains strong support. In case 23200 is breached and Nifty closes below this level then there is every chance of the floodgates to open for big downward move towards 22500 and below. We are, however, very optimistic that fall in Nifty should be arrested next week and a rebound is likely to take place in second half of the week. "Uttarayan" for Sun and Nifty are likely to happen in tandem. Nifty has resistance around 23700-23800 and beyond this level, 24200 should act as stiff resistance.

BankNifty was badly hit last week losing more than 4% with major fall coming on the last day of the week. BankNifty is looking fragile on all time frames. It has strong support around 47300 while resistance is placed around 50000. 

Majority of sectoral indices have cracked last week. It should be prudent to hunt for opportunity in sectoral stocks. We have mentioned the sectors to look out for in the last blog. Traders should adhere to strict stop losses, as wild moves in stocks cannot be ruled out.

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 January 03rd 2025

Dear patrons, the roller coaster ride continues in the markets, with the benchmark indices oscillating wildly to gain some and lose some sessions. While the week before last week saw movement in a very small range last week the markets saw positive closing on three out of five sessions.

World over, the festive atmosphere lead the markets northwards albeit on low volumes. The new year began quite well for the Indian markets as well. Markets now await Q3 results which should decide the markets direction in the coming weeks. Stock specific movements are likely to prevail over broad rallies.

There is rising talk of another virus (Human MetaPneumo Virus or HMPV) wreaking havoc in China. This chatter, however, is more vigorous on the social media. In view of some of the experts, the virus is 60 years old and is found commonly in winter. As the temperature rises after Uttarayan, the virus should vanish. As of today, there seems nothing to be worried about HMPV.

New year should bring along rate cuts in India to the tune of 50 bps in the first half. Capex is likely to increase in the budget.

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

Nifty took support around 23700 as suggested in the last blog and reversed strongly to move towards 24200. Resistance for Nifty lies around 24325. Nifty needs to close above 24325 at least for a couple of sessions to show first sign of trend reversal. It should find support in 24000-23900 range, while strong support lies around 23700. We believe the uptrend should resume in Nifty in coming few sessions leading towards 25000 and above.

BankNifty has looked weaker than Nifty for last few sessions. Support for BankNifty lies around 50500. A break below this level will be bad news for BankNifty. We believe the BankNifty may remain choppy for coming few sessions before a robust rally preempting rate cut in first week of February. Resistance for BankNifty lies around 51200-51300 followed by 51700-51800. Move above 52700 is needed for BankNifty to come out the current trend.

Government of India has declared 2025 as the year of Defence Reforms. This may be time to look at some of the defence stocks. We have been suggesting sectoral rotation in the markets for some time now. 

Top Sectors to Watch: Capital goods, consumer discretionary, data centers, lab-grown diamonds, electronics manufacturing services (EMS), export-oriented sectors, CDMO/CMO pharmaceuticals, precision engineering, semiconductors, real estate, solar and wind energy, textiles, transmission and wastewater treatment.

Stock market wisdom: "The stock market builds wealth over time, not instantly. Trade with a plan, strategy, risk management system, rules, stop loss and profit target."

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.