How are the Markets Looking ?
The end of the week action saw the market trading within a range, with yesterday’s range being particularly high, ranging from 19,600 to 19,850. Today the market opened a gap down due to the performance of the banking sector. Despite this, the Nifty remained reasonably buoyant, reaching 19,900 before experiencing some sell-off.
Overall, it was a positive week, with the markets moving from 19,400 to 19,731. Currently, the market is retesting the resistance levels at 19,800 to 19,850, and it is expected that at some point we may see a right shoulder formation leading to a bullish run towards 21,000
Nifty Heatmap
Several sectors showed a downward trend due to the impact of the Reserve Bank of India’s (RBI) circular. The circular stated that banks engaging in unsecured lending, gold loans, and other consumer credits would require more capital allocation towards these activities, this means that the cost goes up for these entities. This led to a decrease in the stock prices of leading banks such as State Bank of India (-3.69%), Axis bank (-3%), ICICI Bank (-1.5%), and Bajaj Finance (-1.9%).
On the other hand, Larsen & Toubro (L&T) performed well, with a 1.9% increase, along with Hindustan Lever (1.5%). Nifty remained near the green mark due to the positive movement in HDFC Life and SBI Life stocks.
Sectoral Overview
PSU Banks down 4.2% with the Nifty Bank down 1.3% and private banks also down 1.3%. Energy stocks, IT stocks, and commodities also experienced slight declines.
In contrast, defensive sectors such as pharma and FMCG stocks performed well, with a 1% increase in pharma and a 0.9% increase in FMCG. Autos, consumption and real estate stocks also showed positive movement. It is worth noting that real estate stocks have seen a remarkable 48.7% increase in the last 12 months and a 29.7% increase over the past three months.
Mid & Small Cap Performance
Mid caps were not bothered by the RBI notification, they were up 41,811 , a new closing high for midcaps. Small Caps also reached a new closing high at 12,976. The broader part of the market is unbruised and unmoved.
Bank Nifty Overview
Bank Nifty has shown a decently weak chart, struggling to cross resistance levels and breaking down the flag trend line. It has been consistently the weakest link in the market. Investors should pay attention to these patterns when trading in Bank Nifty.
Stock in Focus – TATA Investment
Tata Investment has witnessed a significant rally over the past four years, with the stock price increasing nearly five-fold from Rs. 800 to Rs. 3900 today. Interestingly, each time the stock breaks out to a new high, it tends to retest the breakout level before continuing its upward movement. This pattern presents an opportunity for investors to buy on dips, the lowest risk trade will happen when you buy near the previous high, so that the support level can be your stop loss.
Highlights – GOLD
Gold has been consistently approaching the $1,992 mark, hitting $2,080 thrice. However, the concept of triple tops is viewed as vague. There is a possibility of an inverse head and shoulders pattern forming in gold. In Indian rupee terms, gold is already near its peak at INR 61,300, while in dollar terms, it still has about 5% to go before reaching a new high.
Investors in gold should consider buying on dips as the breakout will likely surprise and the intensity of the move will be unlike anything seen before.
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