Weekend Investing Daily Byte - 23 April 2024

Market Outlook

Nifty is marginally up today, just about 0.14% gained. Flattish to positive. But a news that has been doing rounds in the market today is about how ViX has dropped below the ten level, so marginally came back up beyond 1010 levels again towards the end of the markets. But how the volatility has kind of shrunk in the market. So potential reasons could be that the amount of uncertainties going forward could probably be lower. So the election outcomes have already been factored. There’s not much of a surprise, perhaps left as far as the election outcomes are concerned. And the tension around the Middle East is also kind of subsiding very gradually. So a lot of these factors attribute to the risk in the form of ViX. So VIX going down indicates that perhaps the uncertainties are kind of very low and the market could be poised. This is just one of the explanations that the market could be poised for a run on the upside. So we’ll have to wait and watch how that turns out.

But today we can very clearly see that after recovering quite well from the slump that was seen here in the first two weeks of April, we can see Nifty has recovered quite well after taking support at about 21,800 odd levels and seems to be getting tested around this level of 22,000 22,500. So 22,500 also happens to be a psychological point. And the index is very comfortably trading within the zone. So within this channel, pointing towards the upside. So as long as Nifty can continue to trade within the zone, making higher highs and higher lows, we can confidently say that the uptrend that has been going on will potentially continue for the time to come.

Nifty Heatmap

Moving on, we have the heat map here, which clearly indicates that the markets have held on quite well. I would say to be in the mildly positive territory, despite bad performance from some of the heavyweights, like reliance, which is done, which has dropped 1.4%, HDFC bank losing 0.3%, TCS, Infosys all marginally in the green. So I think irrespective of bad performance coming in from the heavyweights, Nifty has done quite well because of strong performance from some of the other stocks that we can see over here. Maruti has done really well, gaining 1.65%. Titan is up 1%, Nestle doing really well, and we can see Grasim having done extremely well at about 3.9%. So HindalCo losing slightly 1%. And we can see Bharti Airtel has done remarkably well, in fact the greenest out of this entire lot at 3.45%. And as far as the it is concerned, HCL tech continues to do well, about 1.4% today and some of the banks that have not done well are SGFC live has not done well. Bajaj Finsev has lost quite a bit, SDFC bank losing some value there. So apart from that, I think rest of the market segments bearing some stocks have done quite decent to make sure Nifty stays afloat.

Nifty Next Nifty heat map – Good performance coming in from IRFC at about 2.53%. DLF also doing well. In fact, DLF contributing to the overall performance of the real estate sector, which happens to be a standard performer as far as the sectors are concerned. We will take a look at that in the next slide. But ICSA potential life insurance doing well, 2.34%, Bajaj holdings at 1.8%, Abuja Cement had about 3.29% and torrent, pharma, SRF all doing really well. IRCTC, all doing really well, about marginally about 1.5% overall good performance coming in from the Nifty next 50 index as well. But the performance overall has pretty much been in line with the primary benchmark, Nifty 50

Sectoral Overview

So real estate as discussed, is up 2.6%. There is no competition today for real estate sector consumption, the second best at 0.8%, along with FMCG, IT, auto and infra stocks are also up today about half a percent, and rest of the sectors have not done well at all. So if you see commodities, private banks, all very flat today, metals and pharma losing quite a bit at about 1% loss. So as far as the last one month is concerned, we can see real estate has taken a firm lead, followed by public enterprise stocks. And also metals have done really well at about 9.5% for real estate and metals occupying the top positions, followed by public set enterprise stocks and commodities. Auto is also doing really well.

Mid & Small Cap Performance

Mid caps have done really well today to clock 1% and most importantly, having broken above this resistance that we’ve been tracking. So this triple top kind of setup that we’ve been following for quite some time now has successfully been conquered, as we can see. And I wouldn’t be surprised if there is a slight test around this level of 18,300 or 18,350, because we saw how sellers kind of became quite proactive around this mark. So it will be testing times for mid cap around this level. So if this level can be successfully conquered with a couple of strong sessions, then I think mid cap index is poised for a very strong run in the times to come.

Probably similar case with small caps. We can see here, you know, very good performance in the last three sessions. Consecutive gap up, especially after 15 April, we can see good performance coming in, good revival. So as to say in the small cap index too. But we’ll definitely face some resistance around this level, as this is exactly the level from which we saw some selling coming in from the small cap 250 index. Healthy 50% correction after which good recovery has happened. But it’ll be interesting to observe how small cap index reacts in the times to come. So if there can be a conclusive break with a strong green candle in the next few sessions, probably again, small cap to a free index, there is no reason why this index may not continue to outperform rest of the benchmark segments in the next short term period.

Nifty Bank Overview

Nifty bank is flat at 0.1% gains today. But after a good open, the Nifty bank index lost ground as the markets progressed and is currently finding itself in the middle of this channel that we’ve been plotting, that we’ve been monitoring for some time now. And as far as the resistance goes, I think this top becomes the immediate resistance at about 48,700, conquering which we can see bank Nifty getting on its next leg of uptrend.

Nifty Next 50

Nifty next 50 is very similar performance compared to Nifty 50. I think there will, there has been some sort of choppiness that this index has seen. You know, after a very strong run on the upside, you know, where we saw the index going from 56,000 levels all the way till 64, almost touching the 64,000 mark. So there has been some choppiness, but we can clearly see this consolidation after a run like this is always par for the course. And we can see there’s a pole and flag, sort of a formation that, that might have been witnessed. So if and when there is a break in the near short term, we can continue to see Nifty next 50 continuing on its very good outperformance compared to the rest of the win, compared to at least the Nifty 50 index.

Myth Broken – Small SIPs Cannot Make Big Impacts

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