How are the Markets Looking ?
Today has been a good day with Nifty scaling another high, marking the fourth day of positive gains and closing above 22,000. This is our third attempt at crossing the 22,000 mark. As illustrated in the chart, we saw our first attempt early in January, followed by a correction, then a second attempt that just surpassed 22,000, creating a double top, and now we’re making a third effort. Interestingly, we’re observing a cup and handle pattern. If this pattern breaks out, we could be moving towards 22,900 or 23,000 levels.
My speculation for several months has been that we might get closer to 25,000 by the budget, but that remains speculation at this point. However, the current chart suggests that there is no weakness in the frontline stocks. After almost six to eight weeks of consolidation, we’re poised for an upswing that could swiftly add a couple thousand points.
Nifty Heatmap
The banking sector, however, seems to be the only concern, acting more as a drag on momentum. Despite this, today has been favorable for stocks, with infrastructure and autos doing exceptionally well, positioning autos as today’s market leader. FMCG has been stable, with Levers and Nestle performing satisfactorily, but banking still appears quite dull.
Sectoral Overview
Auto sectors have shown a 2.2% increase for the day, pharma has been strong at 1.6%, real estate is making a comeback at 1.5%, and IT stocks have risen by 1.3%. Energy, public sector enterprises, and PSU banks, which have been surging, saw some correction today, but the past week has overall been beneficial, with stocks performing well.
Private banking is the year’s laggard, impacting the Bank Nifty, which is up just 11% for the year. In contrast, real estate has surged 115%, public sector enterprises 113%, PSU banks 84%, and energy 76%. This showcases how sector rotation, a natural component of momentum strategies, is key to staying aligned with market leaders and the simplest way to generate returns.
Mid & Small Cap Performance
Mid caps are nearing their previous highs, and although small caps haven’t reached the same level, they’ve still shown a strong pullback, staying within 500 points of their recent highs.
Nifty Bank Overview
The main area of concern is Nifty Bank, which has remained stagnant at levels seen seven or eight months ago, indicating a lack of strong momentum. A move above 47,000 might give Nifty banks another chance to rally.
Highlights – Nifty Autos
Nifty Auto has been consistently climbing, with the last few days of correction offering another opportunity for growth. Various auto companies have reported promising numbers, contributing to a nearly 50% gain in the auto sector over the last six to eight months, which is remarkable.
Highlights – Nifty REALTY
Nifty Real Estate is also on the rise, having consolidated since the beginning of January. It appears ready to lead Nifty into new territories, suggesting much more strength lies ahead for real estate stocks.
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