WeekendInvesting Daily Byte : 09 Oct 2023

4 min read

How are the Markets Looking ?

The day was not very exciting, starting off with a gap down, but the first hour showed strength, giving hope that the market would gradually climb back up to Friday’s levels. Wednesday, Thursday and Friday; the market had clocked some good rallies going from 19,300 to 19,650. However, the market has lost most of those gains. It seems that the market is currently in a waiting mode, possibly looking for more time before making a significant move. As a result, we may see consolidation or a search for lower ground in the coming days. 

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Nifty Heatmap

Several sectors and stocks have been affected by today’s volatility. HDFC Bank, ICC Bank both were down 1%, State Bank down 1.5% , Kotak Bank down 1.5%, Bajaj Finance, Bajaj FinSA, and Reliance all experienced a decline. IT Stocks did not fall today. Cement, steel, infra, and energy stocks also suffered losses. On the other hand, FMCG and pharma sectors held up relatively well with minimal losses. 

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Sectoral Overview

PSU Banks lost the most, almost 3.1% decline. Interestingly, despite today’s drop, PSU banks are still up 7.4% for the month, making them the best-performing sector in the past month. Today was a decent correction on PSU Banks. Metals, commodities and private banks along with auto, infra, real estate were all down. FMCG, pharma and IT – the three defensive sectors were the least hit – this is expected. 

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Mid & Small Cap Performance Overview

Mid-cap stocks, which had been holding up nicely, have now moved towards their bottom support at 39,600. If this support level is breached, we may see selling intensify and a continuation of the downward trend. This is a critical juncture at which we need to be cautious since a clear and present danger of a waterfall event may occur if this support is broken. 

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Small-cap stocks have also been affected, with the entire day’s trading spent in a downward trend after an initial impressive first-hour candle. On gap down days when the first hour high is not taken out, it indicates a weak sign. This weak sign means that the morning buying spree did not continue throughout the day, and sellers took control. Moving forward, today’s high will be relevant and needs to be monitored. As long as the market stays above today’s high, there may be a chance for a rebound. However, if we fall below today’s low, weakness is evident, and that is a concern for market participants. 

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Bank Nifty Overview

The Nifty Bank is also in a dull and downward phase, currently near the lows seen since May. If the market breaks down from this region, it could lead to further downside pressure. 

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Global Markets

Let’s shift our focus to international markets. The S&P 500 index showed signs of a possible bottoming pattern with a strong bounce on Friday. However, today it is down about half a percent in the futures market, which calls for caution. The Nasdaq also experienced a good bounce, closing a previous gap. Although it is down about half a percent today, as long as it holds above key support levels, there is still hope for a positive outcome. 

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Turning our attention back to specific sectors, stocks related to the railway pocket faced pressure due to concerns about delays or cancellations related to proposed rail lines. This news has caused alarm among investors, impacting railway stocks and other stocks that were sitting on significant profits. Additionally, public sector enterprises and public sector banking stocks have witnessed substantial declines. 

Moving forward, it is crucial to keep an eye on the small-cap index, mid-cap index, and Bank Nifty to gauge the market’s potential direction. These indices will provide key cues for further market movements. 

If you have any questions, please write to support@weekendinvesting.com

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    WeekendInvesting Daily Byte : 09 Oct 2023