Nifty Grivaa Market OutlookWe are getting negative on Nifty as we feel that move in Nifty has been unidirectional from 10600 to 11700 levels in 2 months. We believe that Nifty shall shave off some of the and shall come to around levels of 11200 which falls to around 50 D.M.A.
The reasons for this is -:
- The markets correct when the best stocks and leaders start to correct. We are seeing the corrections in the top index and non-index stocks which were the leaders of this bull market. EX. HUL, Nestle, Britannia, Page industries, Bata, Jubilant food works, bajaj finance, Bajaj Finserv, Hdfc Bank, Yes Bank, IndusInd Bank, Reliance Industries, Asian Paints etc.
- There were only a few pockets of stocks which were taking this market higher. FMCG, IT, CONSUMERS, PVT. Financials and most of the stocks in these sectors are showing signs of fatigue and exhaustion and are facing resistance at higher levels. The only sector which still is showing resilience in the IT pack.
- The bank nifty failed to take out its highs of 28400 and will also retest its 50 DMA placed at 27280 and 100 DMA at 26676 and Nifty always needs the support of bank nifty to move ahead because financials have significant weight in nifty.
- The Pvt. bank Nifty is also showing signs of topping out and is likely to test its 50 DMA of 15496 . Most of the key constituents of this like HDFC Bank, IndusInd Bank, Yes bank, HDFC Ltd are underperforming so this is putting additional pressure on the nifty as Pvt banks are failing to make new highs.
- The auto pack is also underperforming with key stocks making the lower top and lower bottom formations with stocks like Maruti recently breached 9000 levels, Eicher is in bear markets, and the recent price war between Bajaj auto, Hero moto corp and TVs motors is not letting any support from auto majors either.
- Its the nature of markets to shave off the excesses built into the system and let the weak hands surrender shares and stocks go through time wise and price wise corrections and then take again pick up steam for the next leg of the rally.
- The medium-term trend is still bullish and its only in the September series we shall see stocks falling which is just a short-term pullback and healthy for markets.
- The outperforming basket in September series shall be the pharma pack and IT pack which will see many stocks making new highs and we should be overweight in these two sectors in September month.
- People say valuations make the markets fall but markets fall and then valuations become the reason. The markets always give hints and we need to identify those signals to change gears.
- Pharma sector is finding favour with investors because currency tailwind, under the ownership of the stocks, risk-reward very favourable, stocks have bottomed out by forming double bottoms on short term and long term charts, reasonable valuations.
Few More Points -:
- This correction is just routine correction and lot of high-quality stocks shall come at mouth-watering prices which shall be great buying opportunity and investors can prepare their stock list and watchlist and make the investment at those prices.
- Also, when we were analysing a lot of stocks from futures data, we are seeing a lot of short builds up in a lot of high-quality stocks which reflects profit booking in stocks.
- Very soon, we shall release a list of stocks which will contain the buying ranges of stocks which will be tested by many stocks in this 3 -4 percent fall in Nifty.
- This fall in Nifty shall not come in one week but it will start to deceive the normal retail investors as markets will see increased volatility by rising one day and falling on another day. So be selective in building your positions and stay away from high beta spaces like metals and real estate esp.
- Buy high-quality FMCG, IT, Pharma, Consumers in a slow, steady and systematic manner for good returns in OCT series as we shall test the levels of 12000 in OCT most likely again.
Please follow and like us: