How are the Markets Looking ?
The session was marked by volatility, with the market closing the gap created two days prior. Despite multiple attempts to sustain levels above 21,800, the market has been pushed back into a consolidation zone below this level. The market is in a mixed bag situation, showing no significant weakness but also lacking strength to maintain upward momentum.
A notable observation was the formation of a double top at the highs created on the 16th. If the market drops below 21,450, a short-term correction could be imminent. Conversely, overcoming the double top might trigger a rally towards 22,500. The unpredictability of the Nifty’s direction emphasizes the futility of market predictions.
Nifty Heatmap
The Nifty heat map was mixed, with sectors like ONGC, Coal India, NTPC, and power grid showing strength. Tata Steel also performed well, whereas Bharti Airtel and Tata Motors (+7%) had mixed results post their earnings announcements. Pharmaceuticals and some PSU stocks like SBI, despite underwhelming results, showed resilience, indicating underlying strength. This means that despite the bad news, the counter is reasonably strong.
Sectoral Overview
Public sector stocks (+2.1%) have seen significant gains, challenging the skepticism towards government stocks. The real estate sector continues its upward trajectory, with skepticism remaining despite evidence of a robust rally. This trend underscores the cyclicality of sectors and the long-term growth potential in real estate investments. Consumption, FMCG, PSU and IT lost some ground, but not too much.
Mid & Small Cap Performance
Mid caps went to a high of 18,000 but closed close to where they were yesterday. Small caps also pretty much closing at where they were yesterday, losing the intraday gain for the day.
Nifty Bank Overview
Nifty Bank is failing to take out 46,400 however, there is no major weakness that one can see in these charts. These are just time consolidation that can be seen now.
Highlights – Nifty FMCG
Nifty FMCG is looking a bit weak and is back to the levels it was in July 2023
Highlights – Global Moves
The rise in US government bond yields and the US dollar index presents headwinds for emerging markets, including potential stress on currencies and gold. These factors contribute to the selling pressure in markets.
Highlights – Lessons from Paytm case and how WI strategies performed
Today, Paytm has closed at an all time low of Rs. 438. Read the Paytm blog linked here to know the details of the case. The lesson from this case is to not buy falling stocks. This may go to Rs. 300 or even Rs. 250 or may even start building from tomorrow but you must allow the stock to take a pivot.
For example: When Paytm was falling in 2022, one could have waited for the pivot in June around Rs. 700 and taken some risk and if did not work out you would’ve gotten out by Rs. 830. These kind of risks that are taken once a major pivot is crossed when the stock is telling you that it is trying to go up, your stock loss is limited (for discretionary trading).
None of our WeekendInvesting strategies, except one, touched Paytm. That strategy had a 5% loss on Paytm but none of the other strategies touched Paytm and thats the beauty of Momentum Investing – it avoids weak stocks and the quickly exits from losing positions. This approach aims for minimal drawdowns and efficient compounding.
If you have any questions, please write to support@weekendinvesting.com
