Author: equichain

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Daily Report 18-Jul-23

Wall Street had another positive as financials rally ahead of their earnings – Bank of America & Morgan Stanley are due to announce result on Tuesday & Goldman Sachs on Wednesday.

Reliance – JIO financial services demerger on 20-Jul-23.  JIO financial to be included in Nifty 50, BSE Sensex and other indices.  Pre-open price discovery session will be held between 9:00 to 10:00 AM.

HDFCBANK records 30% growth in PAT year on year, HDFC ADR was up 4.43%; Most brokerage house maintains over-weight on HDFCBNAK with target of 2010 – 2200.

F&O data: FII net long: short position at 70.25%:29.75%. Nifty PCR @ 1.54 Vs 1.34 previous.  Banknifty PCR @ 1.46 Vs 0.86 previous.  

Approach on Indices: PCR do indicate overbought zone, but expect another round of short covering.  Indices are trading in unchartered territory.  Nifty around 19800 & Banknifty around 46000 likely to be tested today.  

GIFT NIFTY @ 19769.50 Vs 19730 Nifty future previous close.

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Daily Report 17-Jul-23

Wall Street had flat closing on Friday after rally seen earlier this week on back of declining inflation data.  U.S. market recorded weekly gain on major indices round 2% to 3%.

HDFCBANK to announce result today, 42 HDFCBANK shares will be allotted for every 25 HDFC shared held.  HDFCBANK could see some pressure.

LTIM & TATAELXSI are two IT companies are set to announce result today ahead of LTTS tomorrow and INFY on 20-Jul-23.  INFY rallied around Rs 90/- or 6% in last two trading days.

F&O data: FII long: short position continues to remain at 70.29%:29.73%, Nifty PCR @ 1.34 Vs 1.11 previous.  Banknifty PCR @ 0.86 Vs 0.78.

Approach on Technical: Momentum on indices continue to remain strong, Nifty around 19550 zone Banknifty around 45000 is seeing some supply.  Nifty @ 19232 & Banknifty @ 44228 are key levels

GIFT NIFTY @ 19635 up 16 points at 8:05 AM

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Weekly Reports

15-Jul-23 Technical & Fundamental Insight

Last week – review

Going into trade last week, we had maintained cautious view with allocation to be kept around 70% to 85%.  Market momentum seems to be very strong as tech stock which came out with Q1FY24 result, stock prices reacted positively despite weak numbers.

Technical Insight

Nifty RSI @ 72.51 & RSI average @ 70.30.  Nifty closing @ 19564.50 is highest closing recorded in this rally.  Nifty next target / resistance comes at 19716 & support level comes at 19371 & 19232.

Banknifty RSI @ 58.15 & RSI average @ 59.06.  Banknifty closing on Friday’s closing at 44819, immediate resistance at 45110 & support level comes at 44228.

Approach on Technical: Indices rally looks a bit over-stretched.  Momentum on Nifty is very strong and indicate that outperformance may continue over Banknifty in near term.

Our strategy would focus on any long trade would be short term in nature, we continue to remain cautious after huge rally on indices without any major correction.  Nifty @ 19232 & Banknifty @ 44773 would act as strong support level.  Once this level is broken, can expect further downside.

Fundamental Insight

1) India’s Trade Deficit Narrows To $20.1 Billion In June As Exports, Imports Decline
2) India’s WPI Deflation Widens To Near Eight-Year Low In June
3) HDFC Shareholders Allotted Over 311 Crore Shares Of HDFC Bank

Equichain Wealth: Market View & Strategy

We see current rally and momentum very strong as reaction to weak result from IT stocks supported by positive commentary from management that worst is over.  We are already at lower end of the exposure and current rally would stretch valuation a bit more.  HDFCBANK will come out with result on 17-Jul-23, which will provide cues on who banking stocks would react?  Loan growth and advance remain high at average of 15%.  

We are comfortable with our current exposure in equity around 70% to 85% and continue to find opportunity of stock rotation and maintain allocation level at current level.  We would review IT stocks as worst may be behind us and inflation cooling off in US will provide much needed boost for tech spending helping IT stocks.

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Research Report

Global Market – U.S. inflation softening & U.S. Fed preparing for another rate hike

Global Market – Inflation softening & U.S. Fed preparing for another rate hike

This week we will discuss softening of inflation to below 4%, lowest level since April 2021.  US Fed is behind the curve in this cycle.  US CPI & Core CPI data do indicate softening, so now the focus will shift to US Fed meeting on 26-Jul-23.  

US CPI & PPI data – indicate softening

After strong jobs data in first week of July and US FOMC meeting minutes, market is now factoring in 25-bps rate hike on 26-Jul-23.  But CPI & Core CPI data released this week could trigger one more pause before US Fed could review its decision.

Equichain Wealth Advisors: Market View & Opinion

US Fed has long term inflation target of 2% and latest data released is still above U.S. Fed’s long term inflation target.   Current US interest rate is at 5.00% – 5.25%.  In year 2006 – 07, interest rate in US was at 5.25% and sustain at that level for 14-months before we have seen sub-prime crisis.

We believe, economic slowdown and inflation cooling has direct co-relation.  Corporate earnings may get impacted with leg effect as interest rate hike takes some time to show its impact on bottom of pyramid.

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Daily Report 14-Jul-23

Wall Street had another positive session as PPI & Core PPI data decline more than estimate.  Many big US Banks will come out with their quarterly earnings and provide fresh cues.

Brent Crude back above $80 as market sentiment improves after US CPI inflation data on Wednesday & PPI data yesterday.  Dollar Index below 100 would improve risk-on sentiment.

Mid-cap 100 & Small-cap 100 seen some selling pressure / supply at higher level as valuation looks stretch going into result season.  HDFCBANK Q1FY24 result on 17-Jul-23 will be key.

F&O data: FII net sell 9554 contracts in index futures, net long: short remains at 69.22%:30.78%.  Nifty PCR @ 1.11 Vs 0.88 previous.  Banknifty PCR @ 0.78 Vs 0.67 previous.

Approach on Indices: GIFTNIFTY indicate 50 – 70 points gap-up opening, indices continue to consolidate could trigger another round rally if supported by HDFCBANK & INFY result next week.

GIFTNIFTY @ 19554 Vs 19475 Nifty future previous close

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Daily Report 12-Jul-23

Wall Street ended higher ahead of important US inflation data.  JP Morgan and other financials gained ahead of result later this week and PPI data on Wednesday.

India’s inflation data will be released today at 5:30 PM.  HCLTECH & TCS are due to announce their result today.  IT stocks going into result with low expectation.

GST Council meeting: GST increase to 28% on online-gaming, horse racing and casino.

F&O data: FII added net long 5151 contracts in Nifty while FII were net seller by 4600 in Banknifty & 541 in FINNIFTY futures.  Nifty PCR @ 1.08 stable.  Banknifty PCR @ 0.67 is near to oversold zone.

Approach on Indices: Banknifty is currently trading around important support level.  Nifty is trading near upper end of the range and break above 19524 could trigger another round of rally.  Banknifty trading near 44773 – an important support level.

GIFTNIFTY @ 19545 up 8 points at 8:25 AM

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Daily Report 11-Jul-23

Wall Street had another positive session as it awaits CPI & PPI data on Wednesday & Thursday respectively.  NASDAQ closed flat as tech stocks seen profit booking at higher level.

PM Modi ‘s visit to France in focus: India set to buy 26 Naval Rafales & 3 Scorpene Subs.  Defense procurement board gives clearance ahead of PM’s visit.

Metal stocks were in focus as China slips to brink of deflation, adding urgency to stimulus package.  CPI data was flat in June and PPI fall by 5.4%.

F&O data: FII added 2979 contracts in index futures, net long: short position remains at 71.86%:28.14%.  Nifty PCR @ 0.98 Vs 0.89 previous and Banknifty PCR @ 0.74 Vs 0.75 previous.

Approach on Indices: Indices continue to consolidate, Nifty trading above important support level @ 19181 & Banknifty is trading close to important support level @ 44773.  Banknifty below 44773 could open further downside to 44228 level.

GIFTNIFTY 19484.50 up 28 points at 8:30 AM

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Daily Report 10-Jul-23

Wall Street had another weak to flat session as jobs data were strong and market corrected on strong jobs data.  Fed fund rate monitor tool indicate 91% probability of 25-bps rate hike in next US Fed meeting.

Reliance Industries will be in focus as it approved buyback of Reliance retails shares at 1362 per share.  Reliance retail in fully owned subsidiary of Reliance industries and unlisted and only minority shares are in public.

HAL wins deal of 458 crores from defense – Indian Navy for 2 helicopters.  Defense minister on 3-day visit to Malaysia.

F&O data: FII sold 11244 contracts in index futures, net long position remains at 70.44%.  Nifty PCR @ 0.89 Vs 1.48 previous.  Banknifty PCR @ 0.75 Vs 1.12 previous.

Approach on Indices: GIFTNIFTY indicate flat to weak opening, Nifty @ 19181 & Banknifty @ 44228 likely to be tested and key support level.  

GIFTYNIFTY @ 19422.50 down 35.50 points

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Global Market – U.S. Fed focus to shift to inflation on strong jobs data

Global Market – US Fed – focus shift to inflation on strong jobs data

This week we will discuss another part of the world where high inflation is problem will be back in focus as US Fed meeting on 26-Jul-23.  Last week, we have discussed that China’s PBOC is reducing policy rates and support growth and providing stimulus package.  

US Fed to hike to highest level seen in year 2000

US Fed current policy rates is 5.00% – 5.25%.  If US Fed increase policy rates by 25-bps on 26-Jul-23 to 5.25% – 5.50% – it will be highest policy rates in 21st Century near to rates seen in the year 2000.  Back in 2006 – 2007 policy rates in U.S. were at 5.25% before market has seen sub-prime crisis followed by recession.

US FOMC meeting minutes for June 2023 policy

Almost all members agreed for more rate hike needed and guided for at least 1 – 2 more rate hike in 2023.  Powell said at a conference in Madrid hosted by the Bank of Spain last week. “Inflation pressures continue to run high, and the process of getting inflation back down to 2% has a long way to go.”  

Equichain Wealth Advisors: Market View & Opinion

We believe, it is time keep balance approach as globally risk-on sentiment is high despite fear of further rate hike by U.S. Fed.  We do believe that such high interest rate in U.S. could have global impact and market has not fully factored in steepest rate hike by US Fed in last 15 – 16 months.

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Weekly Reports

8-Jul-23 Technical & Fundamental Insight

Last week – review

Going into trade this week, we maintain status quo and keep exposure around 70% to 85%.  Momentum in indices continue at the beginning of the week which later witness some selling pressure on Friday.  Nifty Small-cap 100 gain by 2.60% this week, other indices gain was capped below 1%.

Technical Insight

• Nifty level for this week would – support level @ 19181 & 18977 & resistance level @ 19512 & 19781.  Nifty likely to continue in consolidation zone with negative bias.

• Banknifty level for this week would – support level @ 44773 & 44228 & resistance level @ 45655 & 45990.  Banknifty seems to be in consolidation zone in uptrend.

Approach on Technical: Indices RSI & RSI average trading near 70 level before seen some supply at higher level after rally of 4% – 5% on Nifty & Banknifty with out any correction.  Fast up move on Indices do indicate some consolidation would be healthy.

Our strategy would to find fresh entry opportunity on correction, Nifty @ 18977 & Banknifty @ 44228 & 43345 would provide healthy entry opportunity.  We would avoid chasing momentum and play catch-up in upward momentum.  

Fundamental Insight

1) Annual Economic Review: Amidst Durable Domestic Growth, External Risks Persist
2) India’s Services PMI Stays Strong Despite Easing In June
3) India Should Push to Add Its Bonds to Global Indexes: RBI Report

Equichain Wealth: Market View & Strategy

Market will now focus on earnings season; IT will start earnings season with HCLTECH & TCS to come out with result on 12-Jul-23 & INFY on 20-Jul-23.  HDFCBANK which usually comes out with result in 2nd week and first among private banks to declare earnings is yet to announce day for Q1FY24 result.

We will continue to maintain strategy to remain invested in range of 70% to 85% and continue keep cautious stance.  Recent run-up seen on indices was too fast as compared to expectation.  Global cues continue to remain muted and indicate rate could go higher.

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8-Jul-23 Fundamental & Technical Insight.pdf
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