How are the Markets Looking ?
The market started the day on a dull note, following a similar trend from the previous day. However, as the day progressed, we witnessed a downward movement, breaking the support level at 21,680 that had been tested in the past few days. This breakage resulted in a bearish flag formation, break of which would suggest the possibility of further downsides. There is a gap that could be filled if the downward momentum continues.
On an hourly basis, there seems to be some weakness in the market. However, when considering the longer-term chart, there is no reason to worry. This short-term weakness may pave the way for lower levels, but it should not deter long-term investors.
Nifty Heatmap
Taking a look at the sector-wise performance, we observed a predominantly red heat map with pockets of green in the pharma and public sector enterprise spaces. IT, Autos, FMCG, cement, steel, and most banks were down. HDFC Bank remained flat, while Reliance and ITC experienced slight gains.
Sectoral Overview
Nifty Pharma stood out with a 2.5% increase, indicating resilience in the healthcare sector. Conversely, Nifty Auto was the worst performer, experiencing a 1.3% decline, followed by private banks (-1.1%), IT down (-1.1%) and real estate (-1%).
Despite the mixed performance, pharma and healthcare sectors appeared to balance out the damage caused by the overall market decline. Oil and gas also showed some gains, but the overall market sentiment was neither strongly positive nor negative.
Mid & Small Cap Performance
Mid-cap and small-cap stocks initially experienced a sharp sell-off; however, they managed to recover towards the end of the day. This indicates a reluctance to go further down, but there are pockets of profit taking due to the overbought situation.
Bank Nifty Overview
It is essential to note the continuous downtrend in Nifty Bank, which started its downward move in the first hour of trading and persisted throughout the day. This downward movement aligns with the weakness witnessed in the broader market.
Highlihgts – PSE
Nifty Autos in the past 6 sessions had moved very sharply. This seems like a contrary action to that move.
Highlihgts – PSE
The performance of the pharma sector has been notably impressive recently. The Nifty Pharma index has been on a relentless rally, rising from 15,800 to 17,274 in just 6 days. Several pharma stocks have shown considerable strength.
Highlihgts – PSE
Lupin reached a 52-week high of 1,300, up from 900 a couple of months ago.
Highlihgts – PSE
Bliss GVS Pharma is breaking ground from Rs. 80 it went to Rs. 148, back to Rs. 112 and is now starting a new leg up.
Highlihgts – PSE
Biocon has come off very nicely from Rs. 220 to Rs. 266.
Highlihgts – PSE
Glenmark Pharma is making a new high at Rs. 900
Highlihgts – PSE
Sun Pharma Advanced Research experienced similar upward trends. These stocks could be interesting for discretionary investors, and buying on dips or retracements to breakout levels might be viable strategies.
Looking at the overall market situation, I remain optimistic in the short to medium term. Although there might be some minor pain in the very short term, I anticipate more Foreign Institutional Investor (FII) flows coming in as we enter the flow of the month. Currently, most institutions are not fully active, and the market volumes have not yet normalized. By the end of the week or so, I expect a more regular flow in the market, which could contribute to market stability.
Over the past couple of months, the market has been exceptional due to various factors such as the upcoming budget month. However, since this year’s budget is a vote on account, there might not be significant market movements on the budget day. Nevertheless, the focus will eventually shift to the elections in May 2024, and the market will start building up momentum towards that event. As the event draws closer, foreign media influence and potential foreign investments might contribute to increased liquidity, leading to a potential surge in the market. It is important to note that after the event, the market might experience consolidation for an extended period. While markets tend to offer lumpy and unexpected returns, this volatility can present attractive opportunities for investors.
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