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. 

Week Ending December 27th 2024

Dear patrons, let me first apologize for not being able to write this blog for last week. Markets remained subdued in the truncated week even though it was an expiry week for the December series derivatives contracts. Nifty managed to gain close to 1% over the week, whereas BankNifty also gained more than 1%.

After touching 24800 in the first week of December, Nifty lost momentum falling well below 24000 mark and closed the last week tad above 23800. Fall in Nifty can mainly be attributed to the falling Rupee. The INR has been falling for some time now against the USD and is currently at record low levels.

Solid rally in CY24 faltered in Q4 due to weak earnings, FII selling, and a stronger U.S. Dollar. With mid-cycle slowdown and earnings growth moderation in FY25, indices may consolidate, and sector rotation is expected. However, we believe India's economy remains on track for multi-year growth driven by real estate revival, strong infrastructure activities, and rising corporate capex. Interest rate cuts are expected to boost consumption, reflecting in corporate earnings.

Market momentum remains weak with only 25% of stocks above the 20 EMA and many below the 50 EMA. It is advisable to wait for stability and momentum to return. A pre-budget rally may begin post Uttarayan/Makar Sankranti. In the mean, one can use this time for study and analysis.

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

As we can see in the above pic. Nifty spent the entire week in a small range. It squandered all the gains in early trade Friday. We believe Nifty to remain in consolidation phase for some more time. Resistance for Nifty is placed around 24000 to start with and 24300-24350 thereafter. A break above 24350 should lead Nifty higher. Support for Nifty lies around 23700
and move below this support may lead Nifty towards recent lows of around 23200. 

BankNifty also spent the week doing nothing. We expect BankNifty to consolidate between 50500 and 51500 for some time. It may face resistance in 51600-51800 range while support lies around 50500. Break above 52600 is needed for BankNifty to move upwards while break below 50500 may lead it towards 48000 levels.

Sectoral rotation may happen during this phase of consolidation. It is advisable for traders to look for opportunities in such rotation. In our view Capital Goods, Pharma and Consumer Durables should outperform the benchmark indices.

Investing demands smart work and patience, while trading requires hard work and emotional control. Don't mistake trading for an easy wealth path. Understand the difference and choose wisely.

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 December 13th December 2024

Dear patrons, after spending the first four days in a tight range of 200 points between 24700 and 24500, Nifty had a violent move on either side on Friday to close almost 1% in the green. Nifty also gained mildly for the week. 

Globally, markets were stable with both the Nasdaq making new highs and Dow closing negative. European indices got a boost in the form of rate cut of 25 bps by the ECB effective 18th December.

Last week we tried to define the need for technical analysis. Let us delve into the secrete of becoming a successful trader. To become a successful trader on must adhere to some rules and strategize for profit maximization.

1: Strategy rule for trading: ✓ Define your entry trigger. ✓ Define your exit triggers. ✓ Define a daily target. ✓ Define a daily loss limit. 

2: Money management: ✓ How much capital are you willing to risk? ✓ How much are you capable of losing? ✓ Determine a risk reward ratio. ✓ Think and plan for profits. 

3: Psychology: ✓ Keep track of your feelings, throughout any trading session. ✓ Don't hesitate to trade at a loss. ✓ Don't be overconfident after a winning strike. ✓ Be attentive to the market signals. 

4: Tools: ✓ What indicators do you use? ✓ What tools do you use for analysis? ✓ What tools do you use for risk management?

The key to becoming a successful trader is how strictly one follows the rules.

Let's take a look at technicals and try to figure out what is in store for next week.

Nifty managed to hold onto the important support level of 24500 and closed handsomely positive. For the coming week Nifty has resistance around 25100. Move above this level should take Nifty further upwards towards new lifetime high. Support for Nifty is placed around 24450-24250 range followed by 24000-23800.

BankNifty also spent first four days in a tight range and saw huge swings on Friday. After a plunge of almost 1000 points BankNifty managed to pull back and erased all losses to close around 0.75% in the green. Resistance for BankNifty is placed around 54000, while support lies around 52700. In all likelihood BankNifty should move beyond its recent high levels in coming days.

Traders should have ample trading opportunity on either side. Markets may, however face shortage of volumes and trading activity may remain dull.

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 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. 

Week Ending November 29th 2024

Dear patrons, in the week gone by, we saw some very volatile moves in the markets owing to monthly expiry of the November derivatives contracts. Benchmark Nifty managed to gain almost 1% over the week. There was a steady news flow in the week, which made the markets oscillate between 24350 and 23900. We will look at the news one by one.

Firstly, there was a ceasefire declaration between the warring sides i.e. Israel and the Hezbullah. Any ceasefire across the globe is always a good omen for the markets. Immediate impact of this ceasefire was seen in crude oil price softening.

Another war, between Russia and Ukraine is also on the cusp of ending. The Ukrainian president has shown eagerness towards ending the war. Change in US presidency is definitely taking effect around the World.

Domestically, GDP growth for Q2 FY25 reduced to 5.4% from 6.7% for Q1 FY25. One of the reasons for this slowdown, is the code of conduct for the general elections in Summer. Government spending came to a standstill during the code of conduct, which played a major role in this slowdown. The numbers tend to have a laggard effect, that is the reason for a slowdown in Q2 whereas the code of conduct was in place for most of Q1. We believe stage is set for the RBI to act on the interest rate side and reduce rates as soon as possible to provide impetus to industrial growth. We have been in a high-interest rate regime for too long and now is the time to push for growth.

Globally, the US markets have been making new lifetime highs every alternate day. With the new president taking office in January, we believe the US markets will remain quite buoyant for some more time. There may be some dampeners like tightening of government spending, increase in tariffs, which, may act negatively for emerging markets.

Back home the Maharashtra elections outcome should have some more positive impact on the markets as we expect a surge in capex by the state government. Implementation of various infrastructure project looks on the cards, boosting the state economy as well as the markets.

Technically Nifty is in the process of bottom formation. We had mentioned in the previous blog that a close above 24350 will be the first indicator of getting out of the woods, you may read it here (https://amitbajare.blogspot.com/2024/11/week-ending-november-22nd-2024.html). Nifty crossed 24350 on a couple of occasions during the week, but could not close above and retracted towards 23800 on expiry day. On the last session of the week, we did see some buying and Nifty managed to close with almost 1% gain. For the coming week, we expect 24300 to act as a major hurdle and a close above this level is warranted for further up move. If Nifty manages to move above 24300 then 24750-24800 should act as resistance. 24000 should be the first support followed by 23600.

Coming to BankNifty, we had stated that it is likely to show some fireworks on the upside. BankNifty managed to gain almost 2% for the week. With immediate support around 51700, BankNifty is likely to move upwards with positive momentum largely in PSBs. 52700 should act as resistance. Close above 52700 will propel the BankNifty towards new lifetime highs.

Some of the sectoral indices were badly hit during the week, like the NiftyIT. We believe it provides a great opportunity to look for attractive investments in this sector. The Auto sector has been the major drag for some time now. Looking for some attractive opportunities in this sector can prove very fruitful in time to come. The broader markets outperformed the indices to a larger extent in both directions. Ample opportunity is available in the mid and small cap space.

Mantra, as always remains "accumulate good quality stocks in every fall" and "STAY INVESTED"

“The key to making money in stocks is not to get scared out of them” ~ Peter Lynch

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 November 22nd 2024

Dear patrons, in a truncated week, bulls finally came into their own and handed over a thumping to the bears. Nifty gained over 2% on Friday to close a timid week in the green. Other indices followed suit with the IT index gaining handsomely.

Global markets were mostly positive, with the US markets leading the way. Election rally is still ON in the US and may well last a bit longer. The US markets seem to be ignoring the rising bond yields and strengthening $. 

Domestically there was stock specific action in Adani group of companies, which resulted in some negative move on Tuesday. Some New York court has indicted the group for alleged corruption in India. In our view the US court has no locus standi in Indian affairs and the US court ruling deserves to go to only one place and that is the DUSTBIN. The markets also shrugged off the negative news and zoomed towards 24000 on the Nifty towards end of the week.

As per Dow theory "market discounts any information" was on the fore Friday. Election results in Maharashtra were expected to be favorable to the ruling parties, which bolstered the investor confidence resulting in a handsome gain. There may still be some more legs to the rally as results have come out better than expected.

Let's try and figure out what lies in store for the coming week.

As we can see in the above chart, Nifty after breaking 23800 had a sharp fall as suggested in the previous blogs. We had also mentioned that 23200 should act as a support (you may read about it here Weekly Market Update: Week Ending November 15th 2024). After breaching 23800 Nifty fell sharply and made a low around 23250. After Friday's pull back 24050-24100 should act as resistance. A close above 24350 will be the first sign that we are out of the woods and a fresh rally can be seen. 23500 should act as support followed by 23200 as strong support in the short term.

BankNifty also registered some gain on Friday but lagged far behind the Nifty. It has closed above the crucial 51000 level. Immediate support for BankNifty lies around 50800 and strong support lies around 49900. On the upside BankNifty looks set for some fireworks. Resistance for BankNifty is placed around 51500-51600 levels followed by 52100-52200 for the coming week.

Action is expected to be stock specific for some more time. Accumulating good quality stocks should reap handsome rewards in coming time.

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.