Month: December 2023

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Research Report

Global Market – Rewind 2023 – Part 2

Global Market – Review of 2023 – Part 2

We have covered from January 2023 to May 2023 in a flash back 2023.  In today’s article we will cover from June 2023 to December 2023 and how rally in last 1 – 2 months has changed global market narrative.

June 2023

• U.S. suspends debt ceiling limit till next U.S. Presidential election, till 1-Jan-25.  
• Non-defense discretionary spending would be “roughly flat” at current year levels in 2024, “when factoring in agreed upon appropriations adjustments,” according to White House officials.
• ECB hikes rate by 25-bps to 4.00%.  ECB guides for continuation of rate hike to bring long term inflation at 2% and to keep interest rate higher as long as necessary.
• BOE – Bank of England raises rates by 50-bps to 5.00%, highest level since 2008.

July 2023

• U.S. CPI & Core CPI inflation data for June 2023 came in July 2023 was below market estimate.  Inflation rise in June 2023 was lowest growth since April 2021.
• Key risk indicator – Dollar Index was trading @ 100.80 & US 10-year bond yield @ 3.83%

August 2023

• Fitch downgrades U.S. ratings to AA+ from AAA.  Rating downgrade expects fiscal deterioration over next three years.
• BOE raises rates by 25-bps to 5.25%.  China cuts RRR rate in a bid to support economy.
• Jackson hole symposium – U.S. Fed chair Jerome Powell indicated interest rate to remain higher.

September 2023

• U.S. & China’s economic data – indicates mix picture.  Top two economic indicates opposite trends and interest rate policy by the respective central banks.
• Brent oil rose above $90 a barrel for the first time since November as the largest OPEC+ producers extended their supply cuts to year-end.
• U.S. Fed keeps rate unchanged on 20-Sep-23, indicates rate hike cycle may be done but signaled rate to remain higher for longer period of time.

October 2023

• ISRAEL-HAMAS war started in first week of October 2023 over the weekend, providing trigger to risk-off sentiment and resulting in surge in crude oil & Gold.
• US bond yield was trading at highest level since 2007.  US 30-year bond yield above 5% while 10-year bond yield around 5%.

November 2023

• Bank of Japan continue to maintain interest rate at -0.10% and US Fed keeps interest rate unchanged in first week of November 2023.
• In Diwali special article – we have focused on SAMVAT 2080 could belong to Gold, Oil, Inflation & Interest rate globally.
• US Fed meeting minutes – “Proceed Carefully” – indicating pause by US Fed and one more rate hike which was expected earlier is now ruled out after recent US FOMC meeting minutes.

December 2023

• Global sentiment has turned positive after US Fed meeting minutes.  
• Global market rallied in range of 3% to 7% in the month of November 2023 and setting the trend for December 2023 on positive note.

Equichain Wealth Advisors: Market View & Opinion

Global market closed the year 2023 on high note and the key reversal came from November 2023 and clear trend emerge post US Fed meeting minutes which highlighted – “Proceed Carefully”.  Now if we look back and compare to Jackson Hole Symposium event in August 2023, which indicated interest rate to remain higher for longer period of time.

We strongly believe that positive news from global central banks has been factored and now the focus will shift to corporate earnings.

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Global Market – Rewind 2023 – Part 1.pdf
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Weekly Reports

30-Dec-23 Technical & Fundamental Insight

Last week – review

Going into trade into last trading week, we expected market to test its recent high and close at higher level due to year end rally.  Most indices closed at highest level with week gains of around.  Indices on Monthly basis has rallied more than 7% on major indices while Mid-cap & Small-cap gained just under 7%.  

Global market closed flat on weekly basis as market was in holiday mood and low volatility.Now let us looks at year change for all these major indices.  Nifty 50 & SENSEX30 gained around 20% while Banknifty underperformed among indices by growth of up to 12.34%.  

Highlight will be Mid-cap 100 & Small-cap100 indices which gained by 46.57% and 55.62% respectively.  After underperforming in 2022 and early part of 2023, 2nd half of calendar year 2023 delivered one of the best returns in recent times.  

Equichain Wealth Advisors: Market View & Strategy  

This week we will not focus on technical because the movement we have seen in last two weeks was mainly due to year-end rally.  We would now focus on fresh indication from technical trend.

We see year-end rally to cool-off in first week and then corporate earnings will take lead from here on.  We remain optimistic on IT and Banking stocks going into earnings season as improvement in global sentiment will play important role, even if result may be weak but we expect positive commentary from IT companies.   Globally expectation of interest rate to cool-off has provided big boost for banking and financials company.  Any correction in first few weeks can be seen as opportunity to deploy fund available.

As mentioned in our earlier we have remained invested around 70% in trading portfolio and 80% in positional portfolio.  Rally in last week was used to book part profit for short term trades and fresh review will be taken with view on corporate earnings, Vote on account (mini budget before general election on 1-Feb-24) and potential reversal in interest rate globally.

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30-Dec-23 Fundamental & Technical Insight.pdf
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23-Dec-23 Technical & Fundamental Insight

Last week – review

Indices ended this week with correction of around 1% but huge volatility was seen on Wednesday.  Market started this week on positive note before seeing sharp reversal on Wednesday & recovery on Thursday and Friday.  Market rally halted after two back-to-back weeks of positive news flow and rallied over 5% on all major indices.

Technical Insight

• Nifty after sharp fall on Wednesday is now trading in neutral zone with bullish trend.  Nifty likely to remain in 20809 to 21492 range.
• Banknifty range for this week likely to be in 46800 & 48200.  Banknifty Thursday’s low of 46919 to act as important level and fresh downtrend once this level is broken.

Approach on Technical: In last week’s technical approach, we mentioned that we will take rally of previous two weeks into consideration.  Historically market in last week of calendar year tends to remain higher specifically when it is trading near its life-time high.

Nifty @ 21070 & 20809 to act as important support level and 21492 as resistance level.  Banknifty @ 47042 & 46314 (23.6% & 38.2% retracement level) to act as support level and 48219 as resistance level.  Market likely to hold on last Thursday’s low and test recent high this week.

Fundamental Insight

1) India’s Agri Exports Likely to Reach $53 Billion This Fiscal: Government
2) RBI To Boost Liquidity with Rs 1.75 Lakh Crore VRR Auction
3) Fitch Says Better Profitability at Indian Corporates to Support Rating Headroom

Equichain Wealth Advisors: Market View & Strategy

We expect market to hold on to current level with year-end rally likely to test recent high made on Wednesday.  Market correction on Wednesday was over-due and COVID scare triggered further sell-off.  We do not expect COVID-19 could trigger fresh weakness as we have seen in March 2020.

Our strategy this week would to focus on year end rally and keep stock specific approach and keep investment level around 80% or increase to 90% with short term view.  We expect rally next week and it may continue in first week of January as well ahead of earnings season.  Once earnings season starts – corporate earnings will provide fresh cues.  Defense, IT & Banks would be interesting play for next 1 – 2 weeks on long side.

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23-Dec-23 Fundamental & Technical Insight.pdf
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Global Market – Rewind 2023 – Part 1

Global Market – Review of 2023

Today we will focus on few important events and article covered in 2023.  We will start with our first article for 2023, we focus on gold which was seen in a win-win situation at start of 2023.  We will cover key global events in last 12 months of 2023

January 2023

• China re-opens its economic from 8-Jan-23 after strict COVID restriction for past 3-years.  EURO zone inflation back to single digit @ 9.2%.
• Gold @ $1867 in January 2023 in a win-win situation?  After 2023, we can say Gold as asset class which has seen positive result for 2023 till date.

February 2023

• US Fed hikes rate by 25-bps to 4.50% to 4.75% on 1-Feb-23 and guided for more rate hike in 2023.
• Bank Of England raises rates by 50-bps to 4.00%, this brings interest rate by BOE to highest level since 2008.
• Russia plans to cut oil output by 500,000 bpd from March 2023.  German yield @ 2.34% highest level seen since 2008.

March 2023

• Silicon Valley Bank: first of few banks to fall his year, regulator shuts down SVB financial group and appoint FDIC.
• US regional bank (FRC) First Republic Bank – Big U.S. banks bail-out by depositing $30 billion.
• ECB hikes rate by 50-bps to 3.50%, highest interest rate since October 2008 and refrain from giving future guidance on interest rate.

April 2023

• OPEC+ nations announce surprise production cut from 1-May-23.  Production cut announced by OPEC + nations starting from 1-May-23 till end of the year is at 1.6 million barrels per day.  
• Corporate earnings for IT major in US help to improve sentiment.  META was up by 13.93% in April 2023 – reacting to its result.
• MICROSOFT & ALPHABET – manage to beat market estimate and improve market sentiment.

May 2023

• US Fed raises rates by 25-bps in meeting held on 3-May-23.  Policy statement soften the rate guidance indicating likely pause after May 2023 meeting outcome.
• US Fed on debt ceiling limit: no one should assume the fed can protect the economy from a failure to pay bills on time, economic consequences ‘highly uncertain’ if no debt deal.

Equichain Wealth Advisors: Market View & Opinion

In today’s article we have covered key events and central banks policy change, where we have seen many flip-flops and now when we look back at the events and how we have seen market then and now when global market is trading at life-time high, we might feel at the missed opportunity.

In next week, last article for 2023 – we will cover from June 2023 to December 2023 and we expect global indices to close 2023 at highest level.

Click on the attachment to read the full report:
Global Market – Rewind 2023 – Part 1.pdf
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Weekly Reports

16-Dec-23 Technical & Fundamental Insight

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%.

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16-Dec-23 Fundamental & Technical Insight.pdf
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Global Market – U.S. Fed, ECB & BOE meeting outcome – Difference in policy rates

Global Market – U.S. Fed, ECB & BOE meeting outcome – Different interest rate policy

This week, we will discuss U.S Fed, ECB & BOE meeting outcome.  All 3 central banks have kept rate unchanged, but their commentary was different.  We will discuss what is decision by these central banks and how market has reacted to it.

US Fed meeting outcome on 13-Dec-23

• US Fed keeps rate unchanged at 5.25% to 5.50%.
• The Fed statement was extremely on the dovish side.  The U.S. central bank is unlikely to raise rates any further, bringing an end to its most aggressive tightening cycle in decades.
• FOMC members forecast THREE rate cuts in 2024 amounting to 75Bbps worst of policy easing.
• The Fed’s statement said it will assess the extent of ‘ANY’ additional policy firming, adding the word ‘any’.

ECB meeting outcome on 14-Dec-23

• ECB hold key interest rate at 4.50%
• ECB will step up to exit from € 1.7 billion of pandemic era stimulus package.  ECB will accelerate end of reinvestment under the PEPP bond buying program.
• ECB President Christine Lagarde “The risks to economic growth remain tilted to the downside,”.

BOE meeting outcome on 14-Dec-23

• BOE keep rate unchanged at 5.25%.  Interest rate is at 15-years high, borrowing cost to remain high.
• The BOE reiterated its policy will be “sufficiently restrictive for sufficiently long” to curb inflation.

Equichain Wealth Advisors: Market View & Opinion

We would like to highlight that U.S. Fed continues to enjoys the highest impact as far as global interest rate is concern.  ECB & BOE meeting outcome is in contrast with US Fed which has been surprisingly dovish against expectation seen in past few weeks.  We expect global asset class would continue to remain robust and expect year end rally on all major risk-on asset class.  

After underperforming in 2022 and first half of 2023, market are heading towards interesting time in 2024.  US Fed pivot will be “Big turning point” in global market as two major democracies will be going into election, India’s election in April – May 2024 & US election in November 2024.

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Global Market – U.S. Fed, ECB & BOE meeting outcome – Different interest rate policy.pdf
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Global Market – US Fed meeting on 13-Dec-23 & US CPI & Core CPI Inflation in focus

Global Market – US Fed meeting on 13-Dec-23 & US CPI & Core CPI Inflation in focus

This week, we would focus on economic data CPI & Core CPI inflation data due to be released on 12-Dec-23 ahead of US Fed meeting.  We would focus on economic data released this week and whether this narrative of interest rate peaking will change or not

US Economic data in last week & Upcoming week

Global market continues to trade near its recent high as optimism on interest rate hike cycle may have ended and interest rate would remain at current level from some time and expectation of rate to come down is later in 2024.

Equichain Wealth Advisors: Market View & Opinion

Key data is yet to be released next week, a day ahead of US Fed meeting outcome, we assume that US Fed will be well aware about the trend which will be considered in the US Fed meeting outcome due on 13-Dec-23.  Currently Fed fund rate monitor tool indicate 94.3% probability of rate to remain unchanged on 13-Dec-23.

We remain cautiously optimistic and we are not expecting any surprise in US Fed decision or any big movement in any of the asset classes as reaction to US Fed meeting outcome.  We expect US Fed to keeps interest rate unchanged and commentary of US Fed chair Jerome Powell will be important

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Global Market – US Fed meeting on 13-Dec-23 & US CPI & Core CPI Inflation in focus.pdf
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9-Dec-23 Technical & Fundamental Insight

Last week – review

Going trade last week, we kept our focus on technical and market internal and we remain bullish.  But the biggest surprise came from state election result declared on 3-Dec-23 where BJP got massive mandate in 3 states, MP, Rajasthan & Chhattisgarh – Market took this election with big positive move on Monday and followed by weekly gains of above 3% on Nifty & SENSEX and Banknifty gained over 5% this week.  

Technical Insight

• Nifty likely to see sideways consolidation and 20698 & 20508 will act as important support level.  Nifty upward momentum continues to remain strong.

• Banknifty, consolidation from current level could be considered as healthy.  Banknifty key support level on downside comes at 45702 & upsides remains open.

Approach on Technical: Monday, 4-Dec-23 move was surprise and it has changed the narrative & chart pattern in near term.  Technical setup needs to adjust to new reality and premium after Monday’s move.

Our strategy for next would be to wait for confirm negative divergence or negative signal before we book further profit or hedge.  Nifty @ 20508 & Banknifty @ 45702 are two important level to watch incase of any correction.  These levels are current 2% to 2.5% from current level.  Any Fresh long position would be preferred around this level.  Momentum on indices remain strong and we would avoid fresh long as we see trend reversal from current level.

Fundamental Insight

RBI Monetary Policy Highlights: Repo Rate Unchanged At 6.5%, Raises GDP Growth Forecast To 7%

Following the review, the MPC decided:

• To keep the repo rate unchanged at 6.5% unanimously. 
• The standing deposit facility rate, pegged 25 basis points below the repo rate, is at 6.25%. 
• The marginal standing facility rate, which is 25 basis points above the repo rate, is at 6.75%. 

The committee had raised the benchmark repo rate by 250 basis points in the last cycle before opting for a pause starting in April’s meet this year.

Taking into account these factors, CPI inflation is projected at 5.4% for 2023-24, Q3 at 5.6% and Q4 at 5.2%, with risks evenly balanced. Assuming a normal monsoon next year, CPI inflation for Q1:2024-25 is projected at 5.2%; Q2 at 4.0%; and Q3 at 4.7%. The risks are evenly balanced. 

Shaktikanta Das, Governor, RBI

Equichain Wealth Advisors: Market View & Strategy

We would continue to remain bullish on market with a medium-term view, but in short term after recent run-up, we may utilize this rally to book part profit and reshuffle portfolio as we appropriate opportunity.  Momentum remains strong but technical indicates that market is in over-bought zone.  Market from current level would consolidate sideways or correct from current level.  We would wait for correction to initiate fresh buys.

This state election result was seen as semi-final ahead of general election.  Market reaction to this result was positive and market is now trading at premium as we see at least 5% premium is seen as far as overall market is concern.  

We have turned our view bullish on IT stocks ahead of US Fed meeting outcome on 13-Dec-23 and TCS buy-back acceptance announcement this week.  IT in recent times have underperformed and any positive trigger could trigger positive reaction in IT stocks.

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9-Dec-23 Fundamental & Technical Insight.pdf
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2-Dec-23 Technical & Fundamental Insight

Last week – review

Going into trade this week we did mention that positive break out could trigger rally of 2% on indices and all major indices are up by more than 2% and Nifty touched fresh life-time high once critical resistance level were crossed.  Rally this week was supported by India’s Q2 GDP numbers which came at 7.6% above estimate, led to rally in infra stocks.

Technical Insight

• Nifty in unchartered territory will further upside to 20525 & above on higher side and key support on nifty for next week could be 19948 & 19736.

• Banknifty upside target for next week could be 45410 & 46310 and support level comes at 43711 on weekly basis.  On Friday, 8-Dec-23 RBI MPC policy – we are expecting volatile session.

Approach on Technical: We consider this week’s closing as positive technical breakout received earlier this week and we see positive trend to continue in coming few weeks, consolidation in first few trading day could be healthy before next up move.

Nifty made fresh life-time high and is currently in unchartered territory, Nifty could test 20525 & 20689 & support level comes at 19948 & 19736.  Banknifty could attempt to outperform in coming weeks as RBI MPC Meeting on 8-Dec-23 could give decisive direction.  Banknifty @ 44207 & 43711 to act as support level while Banknifty could test 45410 & 46310 on upside.  

Fundamental Insight

1) India’s Q2 GDP Grows 7.6% Surpassing Estimates As Manufacturing Spikes
2) Core Industries Grow 12.1% In October Driven By Four Key Sectors
3) Bank Lending To Private Corporate Rises 14.9% In September: RBI Data
4) GST Collections Jump 15% To Rs 1.67 Lakh Crore In November

Equichain Wealth Advisors: Market View & Strategy

Market firing on all cylinders, we expect positive momentum to continue in coming weeks as market will test the sentiment of pause of interest rate hike.  Recent rally may be a good case of – rally on expectation and profit booking on actual news.  We do see further rally run-up to RBI MPC meeting on 8-Dec-23 and US Fed meeting on13-Dec-23 and market could then consolidate or witness profit booking.  

To conclude today’s report – Nifty around 20600 – 20800 & Banknifty around 46000 – 46500 would be good level to book profit around 2nd week of December if comes before the event or post event.  Any correction / consolidation in first few trading days of next week to be considered as buying opportunity ahead key event later this week and next week.

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2-Dec-23 Fundamental & Technical Insight.pdf
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Global Market – Trading at 2023 high & Economic data in focus

Global Market – Trading at 2023 high & Economic data in focus

This week we will discuss how global equity market which either have made fresh high for 2023 and trading near to highest level and market is now factoring in pause by all major central banks.  Today we will also focus on the economic data of U.S. which will be released ahead of U.S. Fed meeting outcome on 13-Dec-23.

U.S. Economic data

We would focus on jobs data which will be released in next week on 5th, 6th & 7th December 2023.  Jobs data have been robust and continue key factor for U.S. Fed to keep interest rate at elevated level.

Global Market – Rallied around 5% – 7% on major indices

Here we would like to highlight U.S. market which has rallied in range of 5% to 7% on major indices.  European stocks where DAX has rallied by around 7% & CAC by less than 4%.  Indian market in last 1 month has rallied by around 6%.

Equichain Wealth Advisors: Market View & Opinion

We have mentioned last week that we are optimistic and we maintain our positive view.  Market will now focus on upcoming economic data and central banks meeting starting from next week.  Any confirmation of pause by major central banks will be taken as positive.  After current rally, we see market evenly balance to react to any outcome, but in case of any disappointment correction in global market could be painful.  

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Global Market – Trading at 2023 high & Economic data in focus.pdf
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