WeekendInvesting Daily Byte : 18 Oct 2023

October 18, 2023 4 min read

How are the Markets Looking ?

We witnessed a surprising day in the market. While the cues from overseas were mostly positive, there were some negative indicators, such as the rapid increase in crude oil prices and uncertainty surrounding the next Federal Reserve meeting and interest rates. As a result, the market started off with a significant fall as the market got nervous, challenging the upward trend that began in early October. This fall closing below yesterday’s low is a concern. 

If the current trend continues, the natural support level for the market would be around 19,000 to 19,300. It’s essential to note that this downward movement also has the potential to form a right shoulder pattern, introducing additional open-ended situations that could impact the market.

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Nifty Heatmap

The repercussions of the day’s events were felt across various sectors. Despite beating expectations, HDFC Bank saw a decline of 1.29%, raising concerns about the banking sector. State Bank of India also experienced a 1% loss, and other banks like Kotak Bank, Axis Bank, ICICI Bank, and Bajaj Finance suffered losses as well. Additionally, Reliance, Unilever, and ITC experienced declines, as did power companies like NTPC and Power Grid. Public sector enterprise stocks, including MMTC and ITI, FACT saw a major decline, some dropping 10%. HUDCO plummeted, likely driven by the announcement of a floor price lower than the market price for HUDCO.

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Sectoral Overview

PSU banks and private banks both experienced losses, down 1.7% and 1.2% respectively , as did energy and infrastructure stocks. The Nifty, which represents the overall market sentiment, dropped by 0.7%. Industries like IT, metals, real estate, and consumption also saw declines, while FMCG and autos remained relatively stable. The only sector that showed some growth was pharmaceuticals.

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Mid & Small Cap Performance Overview

This recent market shift has raised concerns, particularly regarding mid caps hitting a congestion zone and the potential for small caps to experience a double top pattern, leading to further consolidation. 

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Bank Nifty Performance

These factors contribute to the overall worry in the market, which is compounded by the weakness of the Nifty Bank and the biggest contributor to it being unable to hold ground. The Nifty Bank is currently in a precarious position, and while there is hope that the 43,400 to 43,800 range will provide support, it currently appears weak.

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Highlights – HDFC Bank

One specific stock of interest is HDFC Bank. Over the past year, it has consistently returned to the level of 1,520, as it fails to sustain a breakout. If there is a significant downward movement on high volumes, it could potentially go even lower, representing a short-term downward trade opportunity. For the upside, it would require substantial positive news to reverse this trend because even the best of news is not able to pick up the stock, for now. In due course, we are hopeful it will go higher. 

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Stock in Focus – JIO Financial Services

The price chart for the day focuses on JIO Financial Services, which experienced significant volatility since its listing. After opening at 265, it quickly collapsed to 204 within four sessions. Although it demonstrated recovery when some large buyers bought at the bottom, making the price reach 264 or 266, it has once again fallen to 216 and is hurtling down, presenting challenges for buyers.

At Weekend Investing, we typically refrain from buying stocks without at least six months of market history. This caution allows for the establishment of market equilibrium following listings or demergers. It takes time for buyers and sellers to establish their positions, ensuring a more accurate reflection of the stock’s true value. This approach helps mitigate risk and aligns with our long-term investment strategy.

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

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    WeekendInvesting Daily Byte : 18 Oct 2023