Weekend Investing Daily Byte - 2 Dec 2024

If you recall from Friday, FII selling was on the upside. We had poor GDP numbers come out, and we had terrible news over the weekend that India may have to suffer 100% tariffs from the US. That rhetoric was up again, and people were largely expecting that there would be a massacre on Monday. However, by the end of the day today, we are sitting in the green. An unexpected outcome for the day, bringing home the point that narratives can be what they are, but the market tells a story, and you should be listening to it.

The market has been telling us for the last many sessions that it is not willing to go down, regardless of the bad news that is thrown at it. There are two ways of investing: one is to hear the market and follow it, and the other is to keep pushing your narrative that you think the market will do this or that, and the market usually will not do that. So again, the price movements and the Bhagwan Che principle are in full display, showing us what it really means.

Anyhow, as we get into the second half of the video, you will see a presentation on whether December can be a happy month for the markets.

Table of Contents

Where is the market headed?
Sectors of the Day
Stock of the Day
Story of the Day : Will December Be a Happy Month for the Markets?

Where is the market headed?

Market Overview

The market, I think, in the last seven sessions has made an extremely textbook-style move. The market went through a period of being oversold from the top at the end of September until the second half of November, specifically the third week of November. After this, we saw a virtually one-way move down, followed by a good short-covering rally. Post the election outcome in Maharashtra, there was a gap-up, followed by a very tight range for three days. On expiry day, the market moved down and closed the immediate gap, before gradually building back to exactly where we were on Wednesday.

So now, we are at the cusp of either a breakout move or a pullback. I think the breakout point is above 24,350, or at a maximum of 24,500, where the resistance lies. If these levels are taken out, a good move of almost 1,000 points can start from here. However, if we break this low and head back down due to some new developments, we could see a downswing. But right now, the market is absorbing all the bad news very nicely.

So, that’s the story you want to read from the market’s moves.

Nifty Next 50

Nifty Next 50 (or Nifty Junior) is also doing well, up 0.6%, and the chart looks fine. We are recovering fast from the fall.

Nifty Mid and Small Cap

Midcaps have broken out above the average and are looking good, with a significant part of the fall already recovered—up 0.95%. The small-cap charts, as I’ve been mentioning, are looking the best among all the charts. Small-caps have spent almost six months in consolidation, and if we see a new breakout, I wouldn’t be surprised. Small caps are up by 0.7%.

Nifty Bank Overview

On the other hand, the bank index is in limbo. For the last six months, there have been no moves, and right now it doesn’t look like it wants to move too much from here.

Advanced Declined Ratio Trends

In terms of momentum, trends are reasonably flat—306 advances versus 192 declines, with a slightly bullish bias. The

Nifty Heatmap

The Nifty50 index also looks more green than red. We had some red stocks, but the leaders today were UltraTech Cement, Grasim, JSW Steel, Mahindra, Titan, Sun Pharma, and others. Reliance did quite well, up by 1.31% today as well.

Nifty Junior had some great moves from real estate stocks, such as DLF and Lodha, both up nearly 3%. Other gainers included Vedanta, Varun Beverages, Shri Cement, TVS Motors, and Mother Sun. On the downside, there were a few losers, like Adani stocks, but they have been surging in the last week, so a 3-4% dip here or there doesn’t make much of a difference.

Sectoral Overview

Sectoral trends show that real estate is topping the charts today, up 3%. Metals, autos, and commodities—higher beta sectors—are doing well. This suggests that it’s not the defensive sectors that are leading the market, but rather the higher beta stocks, indicating that the market is in a risk-on phase. If it had been just a temporary move, you would have seen FMCG or pharma at the top, but that’s not the case today. In fact, pharma is losing ground, down by 0.1%.

Sectors of the Day

Nifty REALTY Index

The real estate sector saw strong performances from Godrej Properties, Prestige, Phoenix Mills, DLF, and Oberoi Reality. The chart for the real estate index has been consolidating for the last six months, and it may be time to re-challenge new highs.

Stock of the Day

Castrol

The stock spotlight today is on Castrol India. The stock has done really well, up 7% today. On a longer-term basis, Castrol India broke out at the beginning of 2024 after a long period of nine years. Even good stocks can do that. Now, after taking support, it is starting to go back up again, so you could look for some setups on Castrol India if you are a non-discretionary investor or a trader.

Story of the Day : Will December Be a Happy Month for the Markets?

Coming to the topic of the day, will December be a happy month for the markets? Nobody can really predict that, but so far, December is looking promising. The fall seems to have stabilized, and December may continue to consolidate or even start moving up. That would be my best guess.

If we look at the performance data since 1990, December has been a generally positive month. Most of the time, the Nifty has ended the month in the green. Some big green moves have been seen in December 2003, December 2020, and December 2023. Since 1990, more than 85% of the time, the market has seen a positive return of more than 2%, while only 15% of the time has it been more than 2% down. The average return for December over 34 years is about 2.8%. The five-year average, which had gone down to nearly zero about a decade ago, has now rebounded to around 3%.