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9-Mar-24 Technical & Fundamental Insight

Last week – review

Technical trend turned positive and expected indices to test higher level in 4-day trading week.  Banknifty outperformed this week as ICICIBANK, AXISBANK & SBIN lead the Banknifty rally.  Mid-cap & Small-cap under performed as Small-cap index closed the week with cut of 2%.

Technical Insight

• Nifty range of this week seen at 22334 to 22627 and Nifty above 22627 could provide fresh upside triggers.

• Banknifty range seen at 47206 to 48535.  Banknifty has outperformed this week and outperformance likely to continue.

Approach on Technical: Going into trade next week, GIFT Nifty is indicating gap-up opening of more than 100 points on positive global cues.

Technical trend continues to remain positive and Nifty @ 22627 & Banknifty @ 48161 to act as resistance.  If Indices manage to move above these levels, it could further trigger short covering rally and indices could test higher level in this week on Nifty @ 22921 & Banknifty @ 48535.  

Fundamental Insight

1) Centre Hikes Dearness Allowance To 50% Of Basic Pay For Its Employees
2) Gold Rallies To Record High But May Have Overshot Its Near-Term Upside
3) How Discoms Will Be Hit If They’re To Meet Peak Demand Of 250 GW In April-June
4) Singtel Divests 0.8% Stake In Bharti Airtel For Rs 5,849 Crore

Equichain Wealth Advisors: Market View & Strategy

Global sentiment is turning positive ahead of next round of central banks meeting which starts with Bank of Japan on 19-Mar-24, U.S. Fed on 20-Mar-24 & Bank of England on 21-Mar-24.  Recent rally in Gold, US 10-year bond yield below 4.10% & Dollar index below 103 – market rally on hope of rate cut by US Fed by in May 2024.  ECB kept interest rate unchanged on 7-Mar-24 and guided for rate cut in June 2024 depending on incoming data.  BOJ is expected to hike rate on 19-Mar-24.

We have maintained our exposure around 65% – 75% and would prefer to increase deployment gradually with stock specific approach.  Market continues its uptrend and momentum could get strong if it is supported by action of central banks which could lead to short covering rally ahead of financial year end.

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10-Feb-24 Technical & Fundamental Insight

Last week – review

Going into trade last week, we were cautious as market rally seems to be showing some sing of weakness post Budget on 1-Feb-24.  We see budget as non-event as there was no major expectation as it was Vote-On-Account ahead of general election in April – May 2024.  Market this week ended with minor cuts as RBI MPC policy was due this week.

Technical Insight

• Nifty in last two week has been trading in range of 21411 to 22115, Nifty has made double top on last Friday would act as resistance level.  Nifty range expected this week is 21680 to 22115.

• Banknifty range for this week is expected to be 45295 to 46571.  Any major move in Banknifty expected once this range is broken on either side.

Approach on Technical: Indian market reacted to Budget last week and RBI MPC policy this week.  We expect indices to follow technical direction as there are no major scheduled event, outcome of which can impact market direction.

Nifty @ 21680 & Banknifty @ 45295 to act as important support level.  If indices break this level – fresh downside could be expected, otherwise we see indices could attempt fresh up move.

Fundamental Insight

RBI Monetary Policy Key Takeaways

• To keep the repo rate unchanged at 6.5% by a 5:1 majority.
• 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 MPC also decided to remain focused on the withdrawal of accommodation to ensure that inflation progressively aligns with the target, while supporting growth.

India To Sell $11.6 Billion Airwaves to Boost Phone Networks

India’s federal cabinet Thursday approved a plan for selling airwaves in an auction to improve quality and coverage of networks in the world’s second-biggest telecom market.

Forex Reserves Jump To $622.469 Billion

India’s forex reserves jumped by $5.736 billion to $622.469 billion for the week ended Feb. 2, the Reserve Bank said on Friday. In the previous week, the overall reserves had increased by $591 million to $616.733 billion.

Equichain Wealth Advisors: Market View & Strategy

We have remained cautious in last few weeks and continue to remain cautiously optimistic but will continue to follow strategy of fresh allocation on correction.  

We see market at current level has factored in political stability, US fed pivot on interest rate and earnings season so far has failed to provide fresh positive triggers.  Rally in PSU stocks continue on optimism of political stability, but we do believe valuation are stretched in near term.

We would continue to keep exposure around 75% and major allocation would be preferred on correction.  We may review our stance incase indices hit fresh high supported by some positive triggers on interest rate going down or any other substantial news which could change market narrative.

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10-Feb-24 Fundamental & Technical Insight.pdf
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27-Jan-24 Technical & Fundamental Insight

Last week – review

Market going into 3-day trading week with F&O expiry and profit booking seen in previous week, we expected this week to resume uptrend as ICICIBANK result was in-line with market expectation.  Indices seen yet another week of profit booking as Banknifty continue to remain week as HDFCBANK remain weak closing at 1434.90 which is around 15% correction from 16-Jan-24 close.

Technical Insight

• Nifty expected to be in range of 20976 on lower end while fresh up move could be expected once Nifty crosses 21680.  
• Banknifty range for this week could be seen as 43230 on lower side while fresh up move could be expected once Banknifty sustains above 46571.

Approach on Technical: This week again news flow will drive the market as US FOMC meeting outcome on 31-Jan-24, Indian market will be reacting to it on 1-Feb-24 and Budget ahead of general election will be on 1-Feb-24.

Technical setup is weak and it indicates further downside.  Nifty @ 20976 & Banknifty @ 43230 on lower side could be tested this week.  Nifty @ 21680 & Banknifty @ 46571 could be tested on higher side.  VIX @ 13.86 will be important tool and need to turn cautious if VIX goes above 16.

Fundamental Insight

1) LIC Gets RBI Nod to Acquire 9.99% Stake in HDFC Bank
2) Cabinet Approves Rs 8,500 Crore Incentive Scheme For Coal Gasification Projects: Sources
3) Forex Reserves Fall By $2.8 Billion To $616.1 Billion, Says RBI
4) Budget 2024: Government Likely to Target 5.3% Fiscal Deficit Target for FY25, Say Economists

Equichain Wealth Advisors: Market View & Strategy

This week, US FED meeting outcome on 31-Jan-24, Indian market will react to it on 1-Feb-24 along with Union budget ahead of general election on same date 1-Feb-24.  So, we expect any major move is expected on 1-Feb-24.  

Our strategy would be to focus on keeping exposure around 70% and have balancing approach where we remain positive with medium to long term view and cautious in short term.  Technical setup looks bearish and any lack of positive trigger may lead to correction.  

When we see recent rally, which is seen from December 2023, state election result on 3-Dec-23 and US Fed guided that rate hike may done has triggered the ongoing rally.  We have mentioned earlier also that now focus will shift to earning season which has been mixed so far.  We believe post budget – market could see profit booking as run-up in PSU ‘s has been one of the best rallies seen in recent past.  

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13-Jan-24 Technical & Fundamental Insight

Last week – review

Going into trade last week, we expected Nifty range 21506 – 21834 & Banknifty range 47575 – 48636, Nifty tested both end of the range while Banknifty manage to hold lower end of the range.  Banknifty was showing weakness on chart and it has underperformed.  IT result was key highlight for this week as INFY narrowed guidance to 1.5% – 2% indicating worst may be behind as TCS report operating margin at 25%.  

Technical Insight

• Nifty range for this week could be seen as 21631 to 22306.  Nifty move above 21834 has opened further to 22306 level.
• Banknifty range for this week could be seen as 47575 – 48636.  Banknifty range for this week remains same as last week.

Approach on Technical: IT result provided trigger to Nifty this week and Banknifty could take cues from HDFCBANK result due on 16-Jan-24.  Banknifty to take move on either direction.

We will turn cautious or bearish if Banknifty breaks 47575 and fresh upside momentum can be seen on Banknifty above 47980 to 48636 level.  Banknifty could led the positive momentum as chart indicates positive from consolidation. 

Fundamental Insight

1) India’s CPI Inflation Rises to Four-Month High Of 5.69% In December
2) IIP: Growth In India’s Industrial Output Falls To Eight-Month Low At 2.4%
3) Parliament’s Budget Session Likely Between Jan. 31 And Feb. 9

Equichain Wealth Advisors: Market View & Strategy

HDFCBANK result could provide decisive direction to Banknifty and could led next round of rally.  IT stocks rallied this week helped Nifty cross its previous and closed at life time high.  HDFCBANK ‘s quarterly business updates were positive and no negative surprise could support to HDFCBANK stock prices which has seen correction in last two weeks after year end rally which on HDFCBANK which crossed 1700 level.  

We remain positive and would continue to maintain bullish stance unless we see negative cues dominating and market direction turns negative.   Our strategy would to remain long on Banks, Defense stocks and Infrastructure stocks going into Vote-on-account (mini-budget).

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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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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.

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Global Market – Rewind 2023 – Part 1.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 – 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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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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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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