Weekend Investing Daily Byte - 22 April 2024

Market Outlook

A very good bounce from the lower end of this channel, which we saw on Friday, was continued, although most of the gain for the day was done at the open itself. So the market opened with a huge gap up, retraced a bit, but then closed at that open itself. From a perspective of this uptrend, we have retraced more than half of what we fell. So from that perspective, I think it’s a very, very positive sign that the market has stabilized here and has closed at two day high on the chart. So it looks pretty good now. Again, the bottom of the channel will remain the support.

Nifty Heatmap

Nifty heat map HDFC bank disappointing once again after the results. There was some chatter that results look good, but as you can see, expectations probably running even further ahead of that. And there was a sell-off of 1.25%, although not too much I would say. But given the fact that everything else was running today, a fall of 1.25% on HDFC bank was not so good.

State Bank of India doing extremely well along with a lot of other PSU banks plus 2%. ICICI bank almost 2% up. Axis bank doing 2.4%. Very surprisingly Infosys, TCS, Wipro, HCL tech also doing well today and this is coming after a bloodbath in tech stocks on Nasdaq on Friday close. So at least I was expecting a bit more red on the technology stocks, but pleasantly surprised to see green there. And that’s why I always keep saying that the expectations or the narrative that is built in the market is usually wrong. So better to follow trends, better to follow the price and see where it goes.

Coal India, BPCL also doing quite well today. L and T recovering 2.68% although NTPC was down 2% and GSW was also down 1%. So mixed bag in steel and infra and utilities, but very strong move in banking. Nifty next 50 heat map also quite green. You had some fallouts in oil and gas and commodity stocks and steel stocks, but very good gains in geo finance, in PNB, on Kendra bank, in McDowell’s Zidus Life Indigo.

Sectoral Overview

ou had all sectors moving in the green today with PSU banks of course at plus 3% gain for the day.

So the last five sessions we are now moved into green on PSU banks. Pharma, very surprisingly has moved up 1.3%, much ahead of other sectors. So 1.3% gain here. Infrastructure along with autos and FMCG also moved up and you had some gains in consumption and private banking also. Others were more muted, but small gains on that. It is also recovering now, down only 4.7% for the month.

Mid & Small Cap Performance

Mid caps kind of consolidating here, not moving up very sharply. But this resistance is again, has been tested once again. And once we move above that, I think is where some move up will come. Small caps probably doing better. Small caps are now, I think, within half a percent of their previous all-time high. And once this next couple of hundred points are cleared, maybe even 100 points, I think we may see a very, very sharp rally upwards in small caps because this is also tending to become like an inverted head and shoulders pattern right here.

Nifty Bank Overview

Nifty bank again gapped up, closed the gap and moved back up again. So a decent chart, I would say, coming back up from 46,500 again, I think it may take a short at the upper end of the range soon.

Nifty Next 50

Nifty next 50 is also very much in play for a new high within the next, you know, maybe a thousand points or so. So another percent and a half and you’ll be at a new high in Nifty next 50 stocks also. So this has not given up at all. I mean, if you compare the Nifty next Nifty chart with Bank Nifty or Nifty chart, this is extremely positive

Nifty PSU Bank

PSU bank index also has moved up rapidly in the last two. The previous session, it recovered all the ground of the Friday’s loss. And in today’s session, virtually the previous three sessions have been recovered. So again, we are in at play to come back up and you can see that an inverted head and shoulders pattern is forming. So above 7400, a gate will open up for 8000. That will be huge if that happens.

Nifty Pharma

A very good chart formation here with a Doji candle here and an evening star formation here. So I think this island reversal that has happened here should result in more strength upwards. So it is a high probability chance that pharma has seen the worst.

Overall, I think markets have steadied itself. It has consolidated well. It has taken away weak hands. People who were predicting a much deeper drawdown this time have again been caught. So this market has been a buy on dip market. Of course, at some point of time, one of those dips will not come back and then we may have a longer consolidation. But that’s just the nature of the market, so we have to be watchful for that. But you can’t really predict it.

Some US Stock Observations

This is the few charts from the US market. And you can see that is happening in some of the technology stocks. And AMD is down from 230 to 150. Netflix is down from 640 to 550 very, very suddenly. And Nvidia, which has been the market leader, down from nearly $980 to $760 very, very rapidly. So this is one sort of dark cloud on the overall market that if technology continues, technology stocks in the US continue to fall, and if the market leaders of that up move are falling, is this a precursor for the entire US market to fall in the near future? And if that happens, what is the impact on the India market? And that is something that we’ll have to wait and see.

AMD