Week Ending 18th June 2021

 Dear patrons, the week gone by did not have much to cheer for the investors. Markets lost considerable ground albeit to regain at the fag end of the last trading session. The recovery though looks like driven by short covering more than fresh buying; which may be an indicator to more fall in coming days.

Markets were waiting for some trigger after a lack luster week. The Federal Reserve meeting happened to be trigger for the markets. The FED maintained status quo in the interest rates but hinted at increasing rates earlier i.e. in 2023 rather than in 2024 sated previously. The reason behind increase in interest rate is rise in inflation; which is at historic high. Although 2023 is a fair distance away, the markets got spooked by this announcement and resorted to sell off.

Locally there was no news flow to dampen or cheer the spirits of markets. The benchmark indices were mostly driven by global events and actions. Barring the exception of frontline IT stocks every other sector bore the brunt of a sharp sell off. 

As we can see in the picture above Nifty closed just around support levels. Coming week being the monthly expiry, is expected to be volatility. We may witness more fall on indices. Nifty has strong support around 15000, which is a fair distance away from current levels. 

Time looks ripe for accumulation of good stocks in each fall. Every fall in the markets is a God send opportunity to accumulate stocks. We would recommend to buy good quality stocks in this fall.

Stay Invested!!!

Happy Investing!!!

Week Ending 11th June 2021

Dear patrons, it was yet another week of mid cap outperforming the large caps in the markets, as was expected and mentioned in the last blog. Nifty moved in a narrow range of 300 points for the week, making newer highs on multiple occasions. What is the reason for such move on the indices? Let's see one by one.

Global markets as always had a role to play in the moves on Indian markets. The US markets stood firm amidst concerns over rising inflation. The inflation data in US was supposed to be a big concern for the markets but the markets shrugged off the rising inflation. In fact the bond yields have dropped a fair bit after the inflation data, which is rather surprising. Fall in the bond yields lent support to buying in the equities. As we have been saying "Cash is King", liquidity drives the markets and is able to overlook basic rules of economics.

Locally we had robust GST collection, exceeding 1 lakh crore yet again. It only proves that Indian economy is very much driven by local demand. Many states which were under lock down have started opening up and this should augur well for the markets. Monsoon, the biggest driver of the Indian economy has arrived on time and with a bang in the country and is taking big strides, spreading very fast throughout. Prospects of bumper kharif crop augur well for the economy and the markets. The pandemic also looks reasonably under control.

As we can see from the comparative charts of Nifty and Bank Nifty, the Bank Nifty has underperformed. Private banks have been laggards in this rally on the Nifty. PSBs, however, have outperformed the private banks. The stage looks set for the Bank Nifty to move northwards now. While Nifty has been making new highs, the Bank Nifty is a fair distance away from its all time high. Banks are the biggest contributors in the Nifty index, any move in banking space has high impact on Nifty.

All in all the future looks bright for the markets. Traders should be nimble footed as always. Look for good quality stocks to trade. Markets may become tricky to trade, be cautious at higher levels.

Stay Invested!!!

Happy Trading!!!

Week Ending 4th June 2021

Dear patrons, the markets have had a roller coaster ride over the last year or so. In fact the markets have rallied and achieved new highs over this pandemic ridden phase. As they say "Cash is King", this market rally has been and is being driven by liquidity. There is ample liquidity around the globe with almost all governments providing packages to provide impetus to the economy. Economic activity has been hampered due to the ongoing pandemic. The pandemic now seems to be in control and we are likely to come out of the situation with the help of vaccines.

Let's now focus on what transpired in the markets over last week and how are they looking for the next week.

Last week markets were in buoyant mood. Domestic as well as global cues were on the positive side. The MPC came out with its decision to hold interest rate status quo, which added further fuel to the ongoing rally. The RBI Governor stated that the banking regulator will undertake all necessary actions to revive growth. RBI also stated that the Indian economy is expected to grow fastest in the World over next financial year. The growth rate was, however, revised downwards from 10.5% to 9.5%, owing to the horrific second wave. We believe the worst is over as far as the pandemic is concerned and markets have priced in that possibility. Moving forward the Nifty is likely to move upwards towards 16000.

As we can see the rally started from 14150 and should have enough legs to move towards 16000.

Midcap stocks have been participating in this rally big time. We believe that they will outperform large cap stocks for some more time. Once this rally is over, it will be prudent for investors and traders to chose stocks wisely and be nimble footed in trades.

We like select stocks in PSU sector along with PSBs. Select stocks in private sector are also slated to gain handsomely over next few weeks.

Stay Invested!!! Happy Investing!!!

Week Ending 18th September 2020

Dear patrons, yet another lackluster week went by without much action in the markets, barring a very eventful last one and a half hour on last trading day of the week. In last couple of hours of trade during the last trading session, markets saw a big sell off. Nifty and Bank Nifty both bore the brunt of this sell off losing a lot sharply. Bank Nifty was severely punished losing almost 300 points in less than 5 minutes.

The fall in Nifty was attributed to the Indo-China confrontation on the Eastern border and a second front likely to open on the western border. Also, the FOMC commentary in the US was a bit hawkish sending the US markets down impacting global markets. 

Nifty followed the pattern that we suggested in the last blog. Nifty went to 11550-11600 range during the week twice and rebounded sharply on both the occasions. In the first instance Nifty turned from 11568 to move below 11400, though it turned sharply during further sessions to achieve 11600. After closing marginally above 11600, Nifty again started to correct closing the week a tad above 11500.

Bank Nifty, on the other hand remained in a range of 22700 to 22000, mostly remaining volatile. Being the biggest contributor to the Nifty, any move in Bank Nifty has a big impact on the Nifty. Banks and NBFCs lost sharply Friday with many closing with a big negative tick.

The Pharma index managed to hold on to impressive gains during the week, keeping Nifty afloat amid the avalanche in the Banking space. We expect the pharma companies to do well during the pandemic and even after it is over. It remained a silent spectator during the Banking, IT, Engineering, Auto rallies, now time has come for the pharma sector to show some gains. Investors, however need to chose and pick stocks in this sector. 

Coming back to Nifty, Nifty remains weak as long as it trades below 11600. The current formation is hinting at a fall in Nifty towards 11300-11200 range, with 11000 acting as a strong support. One needs to be cautious in taking a trade in the current environment. We saw huge selling in Index Futures on Friday and  it might just be the start of the fall.

Many big-wigs like SBI, Kotak Bank, Reliance, HDFC twins, L&T et all are looking weak on the charts. There may be space in these stocks on the downside. Banking in particular looks vulnerable on all time frames and may correct further.

Be choosy in buying stocks at the current valuations. Investors need to be extremely cautious and nimble footed for the next month or so. Mantra remains the same, accumulate good quality stocks.

Stay Invested!!!

Happy Investing!!!

Week Ending 11th September 2020

Dear patrons, the week gone by was a lack luster affair for the markets. Moving in a narrow range of 300 points the Nifty managed to close in the green for the week, with minuscule gains. There was no trigger for the market to go up or down. The week was pretty slow on news flow as well as events.

The Nifty managed to touch low of 11185 during the week on the back of massive sell off in the US. Correcting from all time high the Nasdaq and the S&P both indices lost heavily in the sell off. The fall reverberated in the global markets, wherein all the markets lost considerable ground. Indian markets were no exception, though they recovered quite sharply. The Nifty managed to bounce back and closed the week a tad above 11450. We had mentioned in the previous blog that Nifty should find support in 11200-10800 band.

Rally in the markets was mostly ruled by Reliance Industries. Reliance rose sharply on announcement of offering a 20 bn USD stake to Amazon in its Retail arm. Reliance is already a debt free company. If the deal with Amazon goes through, it will have expertise as well as reach. Reliance now has bigger market cap than all IT companies on the Nifty combined. Banks also played a part, although a very small part, in the rally.

There are two scenarios that may unfold during the coming week. We will see them one by one.

Scenario 1. Nifty has achieved its upward target and likely to resume its downward trend. In this scenario as per wave theory Nifty may drift towards 11200-11100 range. The following pic. illustrates the point.

Scenario 2. Nifty is yet to complete its retracement and may move up towards 11550. Once Nifty reaches 11550-11600 range it may start the fall towards 11200-11100 levels. The following pic. illustrates the same

One should be prepared with a contingency for any eventuality. Chances of a fall are more than rise. Plus chances of higher movement on the downside than upside are more. One should pick stocks which are fundamentally strong.

New regulation from SEBI has made it mandatory for mutual funds to hold 25% of their portfolio in small cap stocks and same with large cap stocks. This may bring some unwinding in index stocks by mutual funds resulting in fall in Nifty. Markets are already in fragile state due to new margining system, geopolitical tensions with China, the new regulation may prove to be a dampener.

All in all chose fundamentally good stocks. Invest in SIP mode.

Stay Invested!!!

Happy Investing!!!

Week Ending 4th September 2020

Dear patrons; first of all let me apologize for being on and off regarding this blog. The week gone by saw heavy sell off in global as well as domestic markets. The speed and quantum of fall was quite sharp. We will see what transpired in the markets one by one.

India's GDP numbers were announced at the start of the week. For Q1FY20-21 Indian GDP declined by a whopping 23.9%. Almost all sectors saw double digit decline barring the Agriculture sector. Construction and manufacturing bore the worst brunt of the decline falling by around 50% and 40% respectively. The fall in GDP growth was more or less anticipated on the back of the lock down imposed in the country for the entire quarter. The markets were not impressed with the fall and lost more than 2% on the first trading day of the week. However, the Chief Economic Advisor's statement that the economy is witnessing a V shaped recovery, gave some hope to the markets and the Nifty rose mildly in the following sessions.

The fall in GDP growth is a worldwide phenomenon. All the global economies lost sheen due to the Chinese Virus pandemic that holds the world by the scruff of neck, stopping all economic activity across the globe. The pandemic is far from over and we may witness further economic distress in various sectors like Aviation, Hospitality, Tourism etc., which in turn will culminate in big distress in the banking system. The road to recovery is not as bad as in 2008 though. Like during the subprime crisis, this time there is no dearth of finances at various governments' disposal. Governments around the world are pumping in huge liquidity in the system, thereby keeping the markets buoyant. In all likelihood we should see a vaccine for the Chinese Virus around November, which gives solace to the entire mankind.

Apart from Chinese Virus, Indian markets are also unnerved by the geopolitical tensions with China on it's Eastern border. There have been little skirmishes resulting in deaths of soldiers, the situation however remains volatile and may result in a limited war like situation. China's expansionist behavior needs to be restrained and India can take lead in that endeavor.

Let us turn our attention back to the markets. Nifty lost almost 3.5% in the week gone by, marked by big falls and small recoveries. The week started off with a multi month high opening but it lost its way midway through the day losing heavily on high volume. Mid week saw mild gains for Nifty amid average volume. The week ended on a somber note following global cues and losing close to 2%.

We can see in the above image, Nifty was forming a rising wedge, which has been broken from the downside at the start of the week. The gates are open for further fall for now with impending targets in the range of 11200-10800. For the time being Nifty looks fragile. One needs to be nimble footed in trade adhering to strict stop losses.

Focus should remain on fundamentally good stocks with an accumulation mode.

Stay Invested!!!

Happy Investing!!!

Week Ending 26 February 2016

"Money is the most egalitarian force in society. It confers power on whoever holds it" ~ Roger Starr

Dear Patrons, the week gone by, was an eventful week. We had the expiry of the February contract in the derivatives market and the Railway Budget on the same day. This week was very volatile, with Nifty marking big swing downwards. Nifty started the week around 7200, made high of 7252 and then slid to 6961 losing all the gains made in previous week.

Next week starts with a BIG event for the markets, as we have The Budget on Monday. As we head into the Budget, we would like to advice caution and avoid leveraged positions till the event is over. 

Technically, Nifty is in the process of forming a bottom. Should 6950 hold on Nifty, we may see 7350 in a hurry, on breaching 6950, however we may see the previous low breached.

Today, that is on 26 February, the GoI published the Economic Survey. The readings from the Economic Survey paints a rosy picture about the Indian Economy, which, we have been saying for long through this blog. We have always maintained that small steps taken by the GoI will result in large impact on the Economy, and we have been validated by the Economic Survey.

Let us look at some data points.

1. Fiscal Deficit: In the last Budget the target for Fiscal Deficit was fixed at 3.9% of GDP and the Government has largely managed to keep it in check. 

2. Inflation: Inflation has by and large remained in check, mainly due to decrease in Crude prices and high interest rates. Looking at the inflation data, we feel RBI has room to cut rates further and boost the economic activity

3. IIP: IIP has been on a steady path of growth and with increased impetus on Make in India, we should see better industrial activity in future

4. GDP: India is the only shining star in the globe in the current recessionary scenario in the developed world. We expect to grow by 7.5% next year, which is a fabulous growth, in the bleak global outlook

5. Forex: There has been steady growth in Forex Reserve, though not satisfactory, it has increased. We should see more money coming in India over next year, which in turn should help the INR gain some lost ground

6. Agricultural Activity should see major thrust in this Budget, as we are reeling from 2 years of drought. 2016 however promises to be good as far as monsoon is concerned as the El-Nino effect is not present in this year. 

All in all we expect a good Budget, with significant allocation for Agri sector as well as Industry. Our motto remains the same. Accumulate good quality stocks.

Stay Invested!!