How are the Markets Looking ?
Today, the Nifty attempted to break out of a triple-top formation observed in the previous session. Although there was a brief breakout, we eventually returned to the specific range, closing above it at approximately 22,200. This suggests a potential upward movement after seven weeks of consolidation since the year’s start, with no significant downside pressure yet.
Market tops, filled with euphoria, are unpredictable, as evidenced by the 2003 to 2008 bull run, which had many false peaks before the actual peak in January 2008. Over my nearly 29 years in the market, the importance of remaining invested with strategies that move you out of falling stocks and into rising ones has been a constant lesson. Attempting to time the market with large sums of money is usually futile for most investors.
The COVID market fall highlighted the difficulty in buying during downturns, with price anchoring affecting decisions during recoveries. It’s challenging to pick bottoms and tops consistently, making a process-based approach essential.
Nifty Heatmap
Today’s Nifty heat map was mostly red, with HDFC Bank, Power Grid, and Grasim pushing it upwards, while significant players like State Bank of India and ICICI Bank were flat or down. Sector-wise, Banking Nifty led with a 1.2% increase, primarily due to HDFC Bank’s performance. Real estate also showed strength with a 1.2% increase. On the downside, IT stocks fell by 0.9%, and auto stocks were down by 0.6%.
Sectoral Overview
In today’s sectoral overview, the Banking Nifty saw an uplift of 1.2%, notably driven by HDFC Bank’s performance. Real estate stocks also enjoyed a 1.2% increase, with infrastructure and public sector enterprises (PSE) making gains of over half a percent. On the downside, IT stocks dropped by 0.9% and auto stocks by 0.6%, while other sectors showed mixed results.
Over the last week, autos have shown a remarkable improvement with a 4.7% increase, and PSU banks have surged by 5.7%. Public sector enterprise stocks also displayed strong performance. Infrastructure led the gains over the past week and month, showcasing the sector’s robust growth.
A deeper look into the year’s performance reveals real estate leading the charge with a stunning 121% increase, followed by public sector enterprises at 115%, PSU banks at 88%, and energy stocks at 79%. These sectors have emerged as the market’s frontrunners, reflecting significant growth and investment potential.
Mid & Small Cap Performance
Mid caps were subdued, with no notable uptick observed today. Small caps were even more subdued, effectively filling the gap from the previous session.
Nifty Bank Overview
Nifty Bank’s encouraging chart suggests that as long as it remains bullish, the broader market could follow. This crucial resistance support has been surpassed, indicating a potential move towards at least 48,000.
Highlight
Real estate is another sector poised for growth, attempting to break out from an ascending triangle formation. Overall, the market is subdued but stable at the top range of the Nifty, suggesting we may spend a few more days consolidating before possibly reaching new highs.
Highlight
HDFC Bank, applying the two-day thumb rule, showed signs of recovery, illustrating the importance of waiting for stability before considering buying into falling stocks. This rule has proven effective in preventing significant losses while attempting to catch a falling knife, as seen with HDFC Bank and Paytm recently.
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