Month: August 2023

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Weekly Reports

12-Aug-23 Technical & Fundamental Insight

Last week – review

Indices this week ended with cut of under 1% on major indices and Banknifty loss by 1.52%.  RBI MPC meeting outcome on 10-Aug-23 – RBI kept repo rate unchanged at 6.50% and continue its stance of “Withdrawal of Accommodation” with 5:1.  Indices seen consolidating for 2nd straight week.  

Technical Insight

• Nifty on daily chart indicate further weakness.  Nifty @ 19160 could act as key support level and Nifty below 19160 could test 18646.

• Banknifty RSI & RSI average indicate further weakness.  Banknifty could test 43541 and further downside possible.

Approach on Technical: Indices on daily chart are seeing some kind of weakness, further consolidation seems likely in the month of August 2023.

Nifty range of this week looks like 19160 to 19674, Nifty below 19160 could indicate further weakness towards 18646.  Nifty above 19674 could be considered as trend reversal as bullish.  Banknifty closed below 44578 could test 43541 level this week.

Fundamental Insight

1) Bank Credit Growth to MSMEs Decelerates in June Quarter: RBI Data
2) Cabinet Approves Rs 1.39-Lakh Crore Plan For Rural Broadband
3) SBI Seeks Buyers For Its Rs 96,000 Crore Bad Loans
4) Credit Card Default Rises To Rs 4,072 Crore In FY23

Equichain Wealth Advisors: Market View & Strategy

Global cues continue to remain mix as market consolidated this week.  With Q1FY24 result near to its end, we see further consolidation and correction from current level would be healthy after market rally seen since last April 2023.

We see current rally as opportunity to reduce exposure and keep exposure around 70% to 85%.  After recent run-up seen in pharma stocks, some sign of fatigue seen.

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12-Aug-23 Fundamental & Technical Insight.pdf
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Research Report

Global Market – Whether U.S. Fed will manage “Soft Landing”?

Global Market – Whether US Fed will manage to get “Soft Landing”?

This week we will discuss that whether US fed will manage to get “Soft Landing” of economy.  Here by we mean by “Soft Landing” is that inflation gets under control without any major downturn in economy.  U.S. economic data released so far in the month of August 2023 indicates mix view.

U.S. economic data from 1-Aug-23 to 11-Aug-23

Jobs data released in the month of August 2023 indicate stable number with no major surprises, neither positive nor negative.  U.S. Inflation data released on 10-Aug-23 came at 3.20% Vs estimate of 3.30%.  PPI & Core PPI data released on 11-Aug-23 came above estimate. 

What is “Soft Landing” of economy?

“Soft Landing” of economy here means that inflation comes under control without any major economic shock or recession.  U.S. Fed ‘s objective is to keep inflation target at 2% for long term and optimum employment, which usually can be referred to as stable economy with steady growth.

Equichain Wealth Advisors: Market View & Opinion

Current economic data from U.S. indicates mix picture and we see this as long-term positive development for U.S. economic and global stability.  We also expect some softness in economic activity and expect market to correction in next 1 – 2 months.

Looking at the data mentioned in table above, we believe this set of data does indicate moderation in economic activity at slow pace, which we assume as high probability of “Soft Landing”.   

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Global Market – Whether US Fed will manage to get “Soft Landing”?.pdf
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Weekly Reports

5-Aug-23 Technical & Fundamental Insight

Last week – review

We expected some correction / consolidation before market makes its next move, Nifty tested 19458 but was trading above 19160 & Banknifty tested 61.8% retracement level of 43541 to 46256 rally.  Indian market remain mix with Banknifty correct by 1.29% as high interest rate would be major concern.

Technical Insight

• Nifty continue to remain in correction / consolidation zone with 19160 to act as decisive support level this week & break-out above 19678 to act as fresh trigger.

• Banknifty took support at 61.8% retracement level of 43541 to 46256.  Banknifty close below 44578 could open further weakness & above 45219 Banknifty could expect another round of rally.

Approach on Technical: Technical trend continue remain mix and no clear direction in short term while medium term trend remains positive.

Nifty @ 19160 & Banknifty @ 44578 & 44138 to act as critical support level.  Indices would turn negative only if this support level are broken on closing basis and uptrend could resume once Nifty goes above 19674 & Banknifty above 45615.

Fundamental Insight

1) Forex Reserves Drop By $3 Billion To $603.87 Billion
2) India’s Unemployment Rate Falls in July Due to Farm Demand
3) Banks Spend More In Q1 As Employee Costs Continue To Mount

Equichain Wealth: Market View & Strategy

This week focus would shift to RBI MPC meeting outcome on 10-Aug-23.  Most private banks came out with Q1FY24 result in-line or better than street estimate but SBIN seen some increase in slippages to 7659 crores from 3185 crores, quarter ago.  RBI has kept rate unchanged in last two policy meeting and is expected to maintain status quo.  RBI Governor commentary and guidance on future action will provide fresh set of triggers.  Q1FY24 earnings season in last phase as PSU & defense PSU stocks will be in focus.

We would continue to focus on capital allocation strategy which is currently around 70% to 85% with allocation in defensive stocks around 15%.  Any major correction would provide us opportunity to deploy fund which is already available.  In case of sharp up move, we would prefer to keep exposure at same level and look for rotation of stocks within exposure limit.

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05-Aug-23 Fundamental & Technical Insight.pdf
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Research Report

Global Market – Fitch downgrades U.S. rating to AA+ from AAA

Global Market – Fitch downgrades U.S. rating to AA+ from AAA

This week we will discus the decision by Fitch, a rating agency which downgrade U.S. rating from AAA to AA+ as budget deficit increases.  China may continue to support economy and provide stimulus package to aid recovery and we will discuss BOE policy outcome as it raises rates by 25-bps to 5.25%.

U.S. rating downgrade by FITCH

U.S. sovereign credit rating was downgraded to AA+ from AAA, 1 notch down from AAA rating which highest rating by FITCH.  The rating downgrade expects the fiscal deterioration over next three years on concern of growing general government debt burden and erosion of governance.

BOE Raises Rates to 5.25%

The UK central bank lifted its key rate a quarter point to 5.25% on Thursday, which was in line with market expectations after a surprise half-point increase in June. Still, signs of debate between policymakers prompted traders to pare bets on the pace of further hikes, with markets priced in for rates to peak below 5.75% in February.

China expected to cut Bank’s RRR to boost economy

That’s according to several analysts who’ve pointed to the mounting value of policy loans maturing this month and through the rest of the year as reason for the People’s Bank of China to unleash more liquidity.

Equichain Wealth Advisors: Market View & Opinion

Interest rate at current level is high compared to 2006 – 07 period which was followed by 2008 economic crisis.  Interest rate hike seen from March 2022 was steepest rate hike in recent history and is yet to show its impact on economic activity.

Globally equity market is trading near its recent high, commodities are trading at lower level compared to post Russia-Ukraine crisis increase in prices.  Global financial have not factored in any of the risk which can arise out of high interest rate and rating downgrade for U.S. or any other develop economies.  

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Global Market – Fitch downgrades U.S. ratings to AA+ from AAA.pdf
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Daily Reports

Daily Report 1-Aug-23

Wall Street was marginally positive as oil stocks help market gain while health care stocks struggle, big tech stocks such as APPLE & AMAZON remain in focus ahead of its earnings later this week.

Domestic natural gas prices were raised from Aug. 1, 2023, to Aug. 30, 2023. Domestic natural gas prices were raised to $7.85/mmBtu from $7.48/mmBtu. The price of gas from ONGC and OIL nomination fields will have a ceiling of $6.50/mmBtu on a gross calorific value basis.

WTI Crude above $80 & Brent Crude above $85.  Metal price remain strong on hope of China’s stimulus package.

F&O data: FII continue to reduce long position in index futures, net short by 8147 contracts in index futures on Monday.  Net long position now stands at 51.46%.

Approach on Indices: Nifty likely to test 19835 & Banknifty likely to test 45835, indices above this level could open further upside and support remain on Nifty @ 19478 & Banknifty @ 45219.

GIFT NIFTY @ 19883 Vs 19844 Nifty future previous close.


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1-Aug-23 Daily-Report.pdf
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