WeekendInvesting Daily Byte : 08 Sep 2023

3 min read

After consolidating for several weeks, Nifty soared and closed at an all-time high of 19,821, less than 1% away from its peak. This remarkable comeback was expected by those who challenged the previous downtrend five days prior.

Sector Analysis: Winners and Losers

The Nifty heat map showcased several sectors that experienced significant gains. Public sector enterprise stocks such as Coal India, BPCL, ONGC, and NTPC saw substantial rallies. Automobile stocks like Tata Motors, and Hero Motors also made impressive gains. Additionally, there were noteworthy increases in HDFC Bank, State Bank of India, and other finance companies. However, the FMCG sector took a step back, while metals experienced a slight decline. Meanwhile, real estate continued its upward trend with a 2.1% gain.

In the midst of the Nifty rally, mid cap and small cap indices also experienced notable strength. The mid cap index had nine consecutive sessions without closing below the previous close, highlighting its impressive stability. The small cap index, specifically the Nifty Small Cap 250 Index, had ten consecutive sessions of closing at higher levels than the previous close. This remarkable strength does not go unnoticed, although it is essential to acknowledge the possibility of a pullback or correction due to overheating. Nonetheless, it is crucial not to assume that the market has peaked without significant evidence, as calling tops or bottoms is a rearview mirror phenomenon that is difficult to forecast.

Tracking some Crazy Moves !

Throughout the rally, several stocks demonstrated remarkable trends and growth rates. RVNL, for instance, witnessed a substantial increase from Rs30 to Rs162, indicating a five-fold increase in value. This stock’s strategy, which allowed several swings to be captured, contributed to its impressive overall performance.

Additionally, IRCON International experienced a similar pattern, starting at Rs35, consolidating for several months, and eventually reaching Rs133.

PFC, another stock, exhibited astonishing growth, moving from below 100 to 305 in less than a year. These examples highlight the importance of breaking free from biases and allowing stocks to reveal their true potential.

Public sector enterprises and banks were generally considered underperforming stocks due to the biases that arose from their past decade of stagnation. However, it is crucial to break free from these narratives and biases and analyse stocks objectively. By observing stock behavior without any preconceived biases, one can make informed decisions about entry and exit points. Approaching the market from a global perspective, detached from individual names and stocks, is the key to free oneself from biases and make sound investment choices.

Brent crude oil remains a significant variable that may impact the market. If the price of Brent crude were to rise, concerns about the Indian fiscal side, future economic performance, and inflation are likely to emerge. Currently priced at $90, a potential reach of $98 to $100 could intensify these concerns. It is essential to monitor the price of Brent crude oil closely to anticipate potential market shifts accurately.

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    WeekendInvesting Daily Byte : 08 Sep 2023