Week Ending 16th July 2021

Markets were in a buoyant mood over the last week. Indian bourses started the week a tad below 15700 but soon shrugged off the negative bias and moved upwards. The upward trend continued for the next four days with the markets closing the week clocking an all time high on the Nifty.

The markets look well shaped to move further upwards and cross the critical 16000 levels on the Nifty. The pic below indicates that the Nifty has closed just above its resistance and should have enough legs to move towards 16200.

Good quality large and mid caps look good and attractively priced. Try to accumulate this stocks on regular intervals.

Stay Invested!!!

Happy Investing!!!

Week Ending 2nd July 2021

Dear Patrons; the week gone by started on a positive note; the indices on the Indian bourses made a record high on the first trading day of the week. The markets were; however; unable to sustain the rise and fell off from the highs to end in the red on four out of the five sessions. Friday also saw a somber opening but the bulls gathered momentum as the day progressed and the markets ended the session on a positive note.

Markets were mostly driven by global news flow last week. Domestically we are doing fine. The second wave of the pandemic looks under control. More places are opening up for more time. Domestic consumption looks on the rise as is evident from the auto sales numbers. Globally also the situation related to the pandemic is under control and economies globally are trying to gather momentum. The markets, however, as is their habit were looking forward towards interest rate increase in the US in 2022 and were on a selling mode.

On domestic front Reliance AGM acted as a dampener for the markets. A big ticket event which was not good enough for the markets to move up.

As can be seen from the above chart, Nifty looks to have bottomed out for the coming week. Targets of 16100 are visible on the Nifty. The Vix also indicates strength in the markets. Indices should make new high in the coming week and sustain around the 16000 mark on the Nifty.

Banks, private as well as PSUs, should be in the reckoning for the next week, along with oil and gas sector. One should be accumulating good quality banking stocks in each fall.

FMCG should also in the watchlist, as the sector looks to be gaining once the lock downs are over.

Stay Invested!!!

Happy Investing!!!

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!!!