July 2023 - Page 3 of 3 - Equichain Wealth Advisors

Global Market – China’s economic recovery hits road block

This week we will discuss China’s growth momentum slows further and need further stimulus. China’s Central bank PBOC continues its support for YUAN as currency continues to weaken. China after following strict COVID policy since March 2020 has removed strict restriction from 8-Jan-23.

China June PMI @ 49 – reading below 50 is contraction

Speculation about potential policy support has been mounting as the recovery for the world’s second-largest economy loses traction. After a burst of activity in the first quarter, consumer spending is slowing. The housing rebound has fizzled, exports have weakened and infrastructure investment has been muted, too.

China’s PBOC Sticks with Yuan Support as Currency Losses Deepen

The central bank set its so-called fixing for the managed currency at a stronger-than-expected level on Friday, after the offshore yuan extended a seven-month low. The move came after reports that regulators have stepped up scrutiny of currency trading and cross-border capital flows, in a bid to stabilize the yuan.

China removes strong COVID restriction from January 2023

China after following zero tolerance COVID policy for more than 2 years since COVID in March 2020 has taken steps to remove restriction from January 2023 and support economy. Travelers coming into China were required to follow COVID restriction policy and go through quarantine period before of 7 days.

Equichain Wealth Advisors: Market View & Opinion

The People’s Bank of China will likely reduce the rate on its one-year policy loans — known as the medium-term lending facility — by 5 basis points to 2.6% in the final quarter of this year, according to the median estimate in the latest quarterly survey.

China economic data continues to show worrying sign where as US Fed, ECB & BOE continues to raise rates as inflation remains key risk in developed economy. Inflation is not a concern in China – 2nd largest economy. Global market continues to trade near its recent high market is factoring in some kind of stimulus and any weakness in economic recovery will be blessing for market and risk-on sentiment.

Click on the attachment to read the full report:

Global Market – China’s economic recovery hits road block.pdf

Last week – review

We went into last week with muted expectation, but indices witness healthy rally in a holiday shorten week and F&O expiry. HDFCBANK & HDFC merger will be effective from 1-Jul-23 and that trigger huge rally in HDFC twins. All major indices were up by around 2.5% recording in one of the best weeks in recent times.

Technical Insight

• Nifty RSI @ 72.04 & RSI average @ 64.08. Nifty RSI back to above 70 level and gap between RSI & average has more than 8 and indicate overbought zone in near term.

• Banknifty RSI @ 65.36 & RSI average @ 55.93. Banknifty gap between RSI & RSI Average is around 10 points indicate overbought zone.

Approach on Technical: Indices rally this week was sharp which has increase gap between RSI & RSI average by 8 to 10 points on Nifty & Banknifty, indicate overbought zone in near term.

Our strategy this week would be seek buying opportunity around on Nifty around 18932 & 18765 & Banknifty around 44530 & 44253. Going into trade next week do indicate overbought zone and current momentum could take indices higher on Monday before we expect some cool-off or profit taking.

Fundamental Insight

1) Share Of Loans Bearing Over 9% Interest Rate Hits 56.1% In March, Says RBI
2) Commerce Minister Asks Bankers to Ensure Enhanced, Affordable Credit to MSME Exporters
3) HDFC Bank-HDFC Merger To Be Effective July 1

Equichain Wealth: Market View & Strategy

This week, SGX Nifty will start to trade in GIFT CITY from Monday 3-Jul-23 and will be now know as GIFTNIFTY. Market momentum remains strong and major economic data will come only later in the week.

Our strategy going into this week will be to find suitable entry opportunity and would be preferred on decline and will continue to maintain exposure around 70% to 85% as we mentioned in last week. We would continue to seek opportunity with basket of stocks and place our allocation to be beneficial going into result season. We are optimistic on Banks & infrastructure and have cautious view on IT sectors.

Click on the attachment to read the full report:

1-Jul-23 Fundamental & Technical Insight.pdf