Last week – review
Going into trade this week after sharp rally seen in previous week on back of state election result – we were cautiously optimistic. We did not expect US Fed meeting outcome to trigger fresh round of rally as decision by US Fed to pivot was positive surprise. IT, Banks / NBFC & Metals are clear winners of low interest rate globally.
Technical Insight
• Nifty recent run-up is vertical rally which warrants some cautious. Nifty on upside is in unchartered territory could continue momentum & on lower side Nifty @ 20809 can be seen as key support level.
• Banknifty key retracement level at 38.2% comes at 46316 which is around 1800 points from this level.
Approach on Technical: We will consider technical chart with a view that there was two back-to-back positive events / weeks, first was state election result and seconds was US Fed dovish commentary.
Nifty rally from 19703 to 21492 is seen without any major correction / consolidation, retracement level on Nifty comes at 20809 (38.2%) & 20389 (61.8%) and retracement level on Banknifty comes at 46314 (38.2%) & 45136 (61.8%) of rally from 43231 to 48219. We will not add fresh long at current level and wait for correction / consolidation.
Fundamental Insight
1) Net Direct Tax Collection At Rs 10.64 Lakh Crore In April-November
2) Trade Deficit Narrows In November As Imports Fall
3) Rupee Hits Three-Month High As RBI Eases Dollar Buying On Fed Signal, FII Flows
Equichain Wealth Advisors: Market View & Strategy
In a previous week, Indian market had rallied due to domestic reason – state election result declared on 3-Dec-23 which was seen as important ahead of general election next year. Both this factor has turned positive and when we take Top-down approach, both the recent events can provide at least 5% to 10% premium which market has already rallied.
For next two weeks, we would continue to keep exposure around 80% level and deploy remaining fund only in case of there is 5% correction or stock specific approach with upper limit of 85% for next two weeks. We will continue to sit tight with 80% allocation in positional portfolio and may reduce exposure by further 10% in trading portfolio bringing exposure in trading portfolio to around 70%.