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.