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Weekly Reports

11-Mar-23 Technical & Fundamental Insight

Last week – review
We went into trade this week with bullish view and preferred to deploy fund fully with a bullish view and if we exclude Friday’s fall which was triggered by SVB financial group turmoil seen on Thursday after its plan to raise emergency capital by $2.25 billion & loss on bond portfolio by $1.8 billion.

SVB financial group shutdown is biggest banking failure since 2008. Its time to turn cautious as news flow on from corporate will impact near term market movement.

Last week – review

We went into trade this week with bullish view and preferred to deploy fund fully with a bullish view and if we exclude Friday’s fall which was triggered by SVB financial group turmoil seen on Thursday after its plan to raise emergency capital by $2.25 billion & loss on bond portfolio by $1.8 billion.

Wall Street ended this week with cut of around 4.5% on major indices, out of which major decline was seen on Thursday & Friday as SVB financial group collapse.  

Approach on Technical: market technical are turning weak based on news from global market.  At times when news flow dominate market sentiment technical take a back seat and we believe this time to focus on VIX.  

This week onwards we would focus more on VIX and move on VIX above 16 would turn cautious.  Nifty @ 17255 & Banknifty @ 39600 could act as strong support level, once this level is broken market could see sell-off due to panic selling to news flow from SVB financial group and banking stocks in US & Globally could turn cautious.  

Time to turn cautious & turn extra cautious once VIX cross above 16 level.

Fundamental Insight

• Reserve Bank of Australia increase rate by 25-bps to 4.60% Vs estimate of 4.60% & previous 4.35%.
• Bank of Canada kept key interest rate unchanged at 4.50% Vs estimate of 4.50%.
• US Fed chair Jerome Powell testifies – expect appropriate pace of ongoing rate hike.
• Fed fund rate monitor tool indicate 50-bps rate hike at 76% probability.  However by the
Friday’s closing probability of 50-bps rate hike moved down to 40.2%.
• RBI Weekly bulletin: Deposit growth @ 10.1% & Credit growth @ 15.5% as on fortnight ended 24-Feb-23.
• Four largest banks in US: lost $47 billion in collective valuation.

Market View & Strategy

We have been fully invested and deployed around 95% to 100% fund.  We would reduce exposure as near term market correction could trigger another round of sell-off which could be in range of 3% to 5%.  

Biggest fall bring opportunity for bargain buying, as we seen in past any financial crisis could change the path of central bank’s existing policy which is currently hawkish as recently guided in testimony by US Fed chair Jerome Powell.  

Any reason to be bullish – we believe US Fed would pivot in near term which could change dynamics. 

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