Week Ending October 25th 2024

Dear patrons, it was a bad week for bulls, as bears took full control of the Indian markets and plummeted almost all stocks to the lowest levels in recent times. Foreign Institutional Investors have been selling Indian stocks consistently for last month or so while Domestic Institutions are buyers. 

A question arising in all investors' mind, why this selling by FIIs? Let's try to enumerate the points leading to this selling.

• Global instability is a major concern. Particularly tensions in the middle east. The middle East war is having an adverse impact on behavior of Crude Oil prices, causing further unrest for the investors.
• US Elections are making FIIs jittery and they are being safe with hands on cash. Wait and watch looks to be their strategy till new Government is formed in the US.
• Increase in Capital Gains Tax in India has had a big impact on FII outflow.
• Changes in policy by SEBI for derivatives markets. Stricter norms and uneven ASM criteria also play a major role.

US markets have been topsy turvy over last week, closing positive one day and negative one day. Global markets have been in good shape over last week. European indices remained mostly positive.

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

Nifty could not cross 25000 and reversed sharply over the week. In a vicious bout of selling levels tend to lose sanctity. However, we should not ignore levels. Nifty has resistance 24500-24600 range. Only a move above 24900 will reverse the current negative trend. Support for Nifty is placed around 23800-23700 range.

BankNifty has fared better than Nifty in all the mayhem. 51000 did hold till Friday, but eventually fell on weak numbers by some of the banks. BankNifty should find support around 50200-50100. Resistance for BankNifty lies around 51100-51200 levels. Late surge in BankNifty on Friday and a good set of numbers by ICICIBANK, particularly the asset quality should keep BankNifty buoyant, and it may move northwards.

Markets have corrected by around 10% from life-time high levels. We may be in for a relief rally in the markets over next few days. As long as Nifty remains below 25000 it is a "Sell On Rise" market.

Investors should look to accumulate good quality stocks in this fall. Evry dip should be utilized for acquiring more good quality stocks.

Mantra remains the same "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 October 18th 2024

Dear patrons, Indian bourses staged a comeback on the last trading session of the week after losing close to 2% on benchmark indices. Nifty started the week on a positive note but could not sustain as bears upped the ante and took complete control over next three sessions. On the final trading day of the week, however, after losing quite heavily at the start markets saw buying and erased all the losses to close positive.

Results season is one of the main contributors to the topsy turvy nature of the markets over last week. As stated in the previous blog action shifted to stocks and we saw huge swings in specific stocks, depending on their quarterly results. Q2 results, as expected, have been dampeners for the markets. Many of the big wigs have not been able to perform as per market expectations and were plummeted heavily after results. On the other hand, companies with good set of numbers were rewarded with the same vigor.

Some other factors that lead to fall 

1. Trade deficit widened to $ 29.7 bn in August compared to $ 24.2 bn a year ago.

2. Merchandise exports fell to $ 34.7 bn in August from $ 38.3 bn a year ago.

3. Manufacturing as well as services PMI (Purchasing Manager's Index) fell to multi month lows.

4. GST collection rose by 6.5% in September, clocking slowest growth in 40 months.

5. INR fell to historic lows against USD.

All these indicators point to growth slowdown. However, we still believe that most of the corrective phase in the markets is over and markets are in the process of near-term bottom formation. In the short term it looks like, there should be a recovery to certain extent.

Let's take a look at benchmark indices and try to analyze what lies in store for the coming week.

As we had stated in the previous blog 24700-24500 acted as support. Nifty made a low of 24567 and reversed sharply towards 24900. For the coming week 25000-25200 range should act as resistance while 24500-24400 should be strong support range. We reiterate that "as long as Nifty remains below 25500 it is Sell-On-Rise". First signs are visible on charts for an up move towards 25150. Nifty will find it extremely difficult to cross 25500.

BankNifty on the other hand remained quite strong and did not move below all important level of 51000 for the entire week. We had clearly mentioned 51000 as crucial support for BankNifty in last couple of blogs. BankNifty was the main driver of the Friday rally in the markets. It managed to close above 52000 for the week owing to positive result by Axis Bank. 52300 should act as resistance for BankNifty beyond which 52800 is major hurdle. On the downside 51700 should act as support.

Broader markets have seen a significant correction, and many mid and small cap stocks are quoting at attractive valuations. Investment in selective good quality stocks in the mid and small cap space can be considered.

FII's have been sellers for the entire month of October so far. We have seen record selling by FIIs this month, but DIIs have digested all the selling and prevented markets from falling more than 5% in this period. We believe, the foreign investors will return to buying Indian equity sooner than later.

"Investors must keep in mind that there’s a difference between a good company and a good stock. After all, you can buy a good car but pay too much for it.” ~ Richard Thaler

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 October 10th 2024

Dear patrons; after suffering heavy losses in the first week of October, markets consolidated in a tight range to end the second week slightly lower. Consistent selling by Foreign Institutional Investors led to the fall, although Domestic Institutions were buyers in the falling markets.

On geopolitical front, situation remains quite volatile between the fighting countries. Geopolitical tensions continue to keep crude oil on the boil. Crude approaching close to $ 80/barrel jeopardizes growth in emerging economies like India. Also, rising crude is likely to have an adverse impact on inflation, key driver in deciding interest rates for most of the Western World.

FIIs have remained sellers for last couple of weeks in Indian markets, as some drastic steps by the Chinese government on economic front is likely to result in better growth, making China a preferred investment destination for FIIs. We believe that this scenario is temporary and FIIs should return to Indian markets sooner than later.

In other news Corporate Income Tax in India rose more than 11% Y-o-Y to 494697 lakh and personal Income Tax rose by almost 23% to 598484 lakh. The rise in Income Tax collection is testimony to our belief that the Indian economy is in good shape and growing gradually, out pacing its peers.

October brings start of the Q2 results. Tata group giant TCS kicked off the result season on a somber note. We believe, it would be difficult for many corporates to repeat their performance this quarter. 

As is evident from the above pic, Nifty consolidated in a tight range for the week with a negative bias. Nifty faces hurdle in 25150-25300 range. 24700-24500 range should act as support for Nifty for the coming week. We expect markets to remain range bound and action to more stock specific. As long as Nifty remains below 25500 it is "Sell-On-Rise" market. A breakout above 25500 is needed for Nifty to move northwards.

BankNifty is trying hard to keep head above the very crucial 51000 level. It managed to close above this all-important level on all days after closing below 51000 Monday. BankNifty is likely to face resistance around 51600 and 52000 thereafter. A move above 52000 should make ground clear for BankNifty to move towards new highs.

As stated previously, we believe action to remain stock specific. Traders may focus towards stocks instead of indices. Waiting for a clear breakout or breakdown should prove to be most prudent strategy. In the mean identification of good quality stocks can be undertaken.

Investors should take opportunity to buy good quality stocks on every dip in the markets and stay Invested.

"Hastily taken decisions always result in heavy losses. Take your time before putting money in any stock." ~ Rakesh Jhunjhunwala

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 October 4th 2024

Dear patrons, finally the Indian markets witnessed some sort of selling over last week with benchmark indices losing more than 4% in a truncated week. Rest of the world remained steady with a positive bias, but domestic markets went into a bear grip due to geopolitical as well as regulatory action.

Geopolitically, entire world is on a fragile ground. Tension brewing in the middle east played the spoil sport in a raging bull market leading to some selling in global as well as domestic markets. Real action in Indian markets was on account of SEBI's new guidelines for regulation of the derivatives markets. NSE (National Stocke Exchange) is the World's biggest derivatives market and contributes almost 80% of the daily turnover. The fear that new regulatory framework may lead to exit of retail traders from derivatives markets spooked the markets and lead to big falls on consecutive sessions.

Tension in middle east also played its part in spoiling mood in the markets. First casualty of the looming "World War 3" was crude oil. Crude prices spiked up by almost 5% as soon as the news of new offensive came out. Rise in crude prices particularly hampers India's economy, as crude oil imports is the biggest bill for the Indian exchequer. 

Coming to some good news, GST collection for the month of September saw a 6.5% rise year-on-year, testimony to the better health of the Indian economy. We believe that the festive season in near future will provide further impetus to consumer spending and lead to higher GST collection. 

As we can see Nifty has closed below the support of rising channel, which suggest that there may be some more downside remaining. Immediate support on Fibonacci is place around 24800. Other indicators also suggest support around 24800-24900. Close below 24800 may open door for further down move towards 24300. If Nifty manages to turn around and move upwards 25500-25600 will act as resistance zone. 

BankNifty has closed just a tad below its major support on Fibonacci. BankNifty is making a flag pattern and has witnessed a breach on the downside. Next strong support for BankNifty is placed around 51000. Close below 51000 may lead to further downward movement. If BankNifty stages a turnaround, resistance is placed around 52600-52700 range.

Traders may look for opportunities in beaten down stocks for some quick gain. Indian markets have been very resilient in the near past and are likely to act in the same way in future as well. Adhering to strict stop losses on either side will prove to be a blessing in disguise.

FIIs have been heavy sellers in the last week but were matched by the DIIs with the same fervor. Lot of money is on the sidelines in Indian markets and this liquidity should lead the way forward.

It is a God send opportunity for investors. Investors should look to accumulate good quality stocks in every dip. In the long run the Indian equity markets look robust and should outperform their global peers by some distance.

STAY INVESTED!!!

"Invest for the long haul. Don't get too greedy and don't get too scared" ~ Shelby M. C. Davis

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 September 27th 2024

Dear patrons; it has been a bull ride for the markets over the last few weeks and it is only gaining strength with passing time. Benchmark indices were on a roll for most of the week, clocking new lifetime high levels for most of the week.

In a slow news week bulls were at their ferocious best taking Nifty beyond 26000 mostly on the back of short covering owing to September series derivatives expiry. Surge in markets can also be attributed to incessant flow of money from domestic investors. Liquidity is no problem for the Indian markets as global bankers are in the process of reducing interest rates, thereby infusing a lot of liquidity in the financial system.

Global markets were also pretty buoyant and made new lifetime highs all over. Reduction in interest rates have sparked new optimism for growth across the globe resulting in strong bull runs.

Domestically, everything looks calm and optimistic on the economic front. As the festive season sets on there should be more spending by consumers leading to record tax collection for the government and record sells for consumer durables, FMCG and two-wheeler makers. Global expenditure on IT should also increase with reducing interest rates.

Let us take a look at what happened on technical front on indices and try to figure out what lies in store.

As stated in the previous blog Nifty staged a superb rally gaining more than 1.5% over the week. Nothing is amiss on charts as far as the uptrend is concerned. Markets may consolidate in the coming weeks with range bound moves within a small band. It has support around 25900 and resistance around 26400-26500, Almost all parameters on the charts are indicating some more upside.

After a bit of consolidation BankNifty also surged over last couple of weeks to post another lifetime high. It witnessed some profit booking on Friday. Stage looks set for BankNifty for yet another lifetime high. PSU banks are looking promising for the coming weeks.

In a truncated week market may behave erratically and with higher volatility. Traders should adhere to strict stop losses. Booking small profits and reentering the trade may remain flavor of the week.

Investors should look to accumulated good quality stocks and stay invested.

You never know what kind of setup market will present to you, your objective should be to find opportunity where risk reward ratio is best. ~ Jaymin Shah

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 September 13th 2024

Dear patrons, markets staged a superb comeback after a sharp and swift down move ending the week on a high. Indian markets have made it a habit of bouncing back with a greater ferocity after every fall. The latest bounce may be attributed to short covering on account of Nifty weekly expiry.

We did anticipate this up move in our last blog, where we had mentioned, Nifty moving to newer highs once it moves past 25200, and lo and behold it did zoom past 25400 within an hour of going past 25200. You may read it here ((Weekly Market Update: Week Ending 06th September 2024 (amitbajare.blogspot.com))

It was a slow news week for the markets. On the penultimate day of the week the European Central Bank cut interest rates by 25 bps to 3.50%. We had also predicted that all global bankers would start cutting rates ones there is a cut by the Federal Reserve of the US. The EU has gone one step ahead and cut rates as soon as a clear indication of rate cuts in the US came to the fore. Economic growth across the globe has dwindled across sectors and it becomes imperative for bankers worldwide to initiate action on interest rate front. 

Domestically for the second time in succession the CPI (Consumer Price Index) stayed below 4% to 3.65%, second best in almost 5 years. The level of CPI is comfortably below RBI's 4% mark. The IIP (Index of Industrial Production) also grew slightly to 4.8% against 4.7% earlier. The numbers are a testimony to India's robust growth despite challenges across the globe. We believe the impending rate cuts should bolster the economic activity in India and provide further impetus to growth. Influx of liquidity owing to rate cuts should reflect in higher allocation to risky assets like stocks resulting in further strengthening of an already bullish market.

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

Nifty has made a new lifetime high last week. We are comfortably placed on most parameters for further up move on Nifty for the coming week. Support for Nifty lies around 25100-25200 range. As long as Nifty remains above 24900, it is a "Buy-On-Dips" market. Nifty is likely to move northwards for the first half of the week. Resistance is placed around 25500-25600 range. News flow after the Fed Interest Rate decision on 18th September will decide further move in the market. 

BankNifty also performed decently well last week. It will be the most impacted index after the Fed Rate cut. The picture looks good for some more up move in the coming week. Support for BankNifty lies around 51400-51200 range while resistance is placed around 52000-52300 range. A close above 52300 may propel BankNifty towards 53000 in a hurry.

Traders are advised to exercise caution with optimism. The old adage "Buy on rumor, sell on news" may well be kept at the back of the mind. Adhere to strict stop losses on either side. The moves may be wild and volatile. There may a spurt in volatility, particularly in banking stocks. Carrying leveraged position overnight may be risky in the coming week. There may be gap up or gap down opening in the market on multiple occasions.

Investors may look to accumulate certain good quality stocks in every dip.

Stay Invested!!!

“The goal of a successful trader is to make the best trades. Money is secondary.”~ Alexander Elder

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.

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Week Ending 06th September 2024

Dear patrons, wishing you all a very happy "Ganeshotsav". May Lord Ganesha's divine blessings bring you eternal happiness and peace, protect you from evil, and fulfill all your dreams and desires.

After a steady start to the week markets world over lost upward momentum and by the end of the week were fully gripped by the bears. Large sell offs took place across the globe, with the US markets leading the fall. Weak numbers over last weekend spooked investors in the US. Sell off in all asset classes happened due to fear of a looming recession in the world's biggest economy. After a big rally in short time markets needed a reason to correct and slight variation in jobs data provided that reason.

All the global markets fell from recent highs in varied quantum. Indian markets also fell sharply on last trading day of the week, after a recovery in mid - week session. Benchmark indices lost more than 1% to end the week on a somber note. We had cautioned in the last blog that aa correction is due and may arrive unexpected and be sharp and swift. (you may read it here Weekly Market Update: Week Ending August 30th 2024 (amitbajare.blogspot.com)).

We believe recessionary fear is unwarranted, particularly for a consumption driven economy like India. Also, this fear brings crude oil prices southwards, which is good news for Indian economy. Indian economy is moving in the right direction and out doing all its competitors by a comprehensive margin. The markets may feel a few jitters over next few days but are likely to recover faster than expected.

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

As we can see after a very good up move, markets have gone down sharply on Friday. Nifty has closed a tad below its support around 24900. We believe there may be some more pain in store at the start of the week for Nifty, with support around 24600-24500 range. Resistance for Nifty is placed around 25050-25100 levels. A close below 24500 may open doors for further downward movement towards 23800. If Nifty manages to close above 25100, immediate hurdle is placed around 25200, thereafter it is open sky for Nifty to move to new lifetime high levels.

BankNifty didn't do much over last couple of months. However, after a breakout at the start of the week BankNifty gave up gains and was firmly in bear grip. It may find support around 50200-50000 range. If BankNifty closes below 50000 more downward movement can't be ruled out for much lower levels.

We believe markets to trade with a negative bias for the coming week. Thereafter, as the big event of Fed rate cut comes closer markets should be able to stage a recovery. Markets remain "Buy-On-Dips". Select mid and small cap stocks can be accumulated for short as well as long term.

Keep accumulating good stocks with every dip and stay invested.

“A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” ~ Warren Buffet

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.