WeekendInvesting Daily Byte : 20 Oct 2023

4 min read

How are the Markets Looking ?

The market opened near 19520 and stayed within the range of the previous session so it is a relief that we did not drop down. However, we are very close to an area where we could drop down. Yesterday’s low of the day was held on to with the candlestick pattern showing a narrow range, indicating market uncertainty. The market has shown a lack of direction, with no clear trends emerging. Markets are likely waiting for cues from overseas markets before making significant moves.

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Nifty Heatmap

In terms of sector performance, some notable trends emerged. Results from the FMCG (Fast Moving Consumer Goods) majors came out and the FMCG companies reported a continued demand issue particularly at the bottom of the economic pyramid, that was prevalent in the previous quarter as well. This resulted in a decline in stock prices for major FMCG players with Hindustan Unilever down 2%. ITC was down 2.69% despite beating the analyst expectations. 

The pharma sector also saw some selling pressure, with stocks like DV’s Lab and Cipla experiencing a decline. Auto stocks, including Maruti, Tata Motors, and Mahindra, also faced selling pressure.

There was some bigger selling in the banking sector with State Bank of India down 1.4%, Axis Bank 1.1%. Kotak Bank was surprisingly up 1.79%. However, HDFC Bank remained relatively unaffected. TCS witnessed an increase in stock prices up 1.13%, while Infosys experienced a slight decline 0.45%.

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Sectoral Overview

If we analyse the sectors on a broader scale, we observe that almost all sectors closed in the red, with PSU Banks -1.6%. Metals, FMCG, Public Sector Enterprises, Pharma, Real Estate, and Commodities experiencing significant losses of more than 1%. Infosys, Infrastructure, Consumption, Auto, and Energy sectors saw moderate losses, while other sectors had minor losses.

Analyzing the performance over a longer time frame, we can see that most sectors, except autos, closed the week with losses. Looking at the month-long performance, only real estate, public sector enterprises, and autos managed to stay flat or experience minimal gains. Conversely, all other sectors faced declines, indicating a market in need of stabilisation.

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Mid & Small Cap Performance Overview

Typically, mid caps and small caps have been more resilient to market sentiment in the past. However, recent trends have shown a change in this pattern. The MidCap 100 index dropped, coming close to its support levels. If this support breaks, further declines are expected. Small caps also experienced a slight decline of 1% from the top of the day but were not hit as hard as other indices.

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Bank Nifty Performance

The Nifty Bank remained within the range of the previous day but is at a critical level of support. This presents an opportunity for investors to consider buying at this level, with tight stop-losses in place. However, it is worth mentioning that until the 44,800 level is breached, it is unlikely that the market will enter an upward trajectory. This is also making a Head and Shoulders pattern or a Double Top. If this pivot breaks, the fall can be sharper. We are in a sticky situation. 

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Highlights – FMCG Sector

The FMCG sector, as a whole, has been trading within a range since June, showing a distribution-like pattern.

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ITC is forming a head and shoulders pattern, with multiple levels of support at 435. If this level is breached, ITC might experience further declines. 

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Hindustan Unilever

Hindustan Unilever has been stagnant for a while, and without volume growth, the stock’s ability to hold its current levels is limited. The core of any FMCG company is to generate growth at the bottom of the pyramid. 

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Market Overview

It is crucial to consider global factors that can influence the market. Overseas markets and the performance of gold prices are indicators of potential market direction. Currently, overseas markets are weakening, and gold prices are rising rapidly. Gold is known to surge during times of turbulence, fear, and uncertainty. Therefore, the increase in gold prices suggests a sense of nervousness in the market.

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

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    WeekendInvesting Daily Byte : 20 Oct 2023