Wasssup, People! How are you?
After a frustrating week when stop losses are hitting left right and center, we tend to doubt ourselves and question our strategies and trading style. But trust me it’s just a type of market where you have to avoid trading and focus on the bigger picture.
After the cadaverous whipsaws in DOW JONES and then in NIFTY, the only choice we are left with is to stay light and stay low.
In today’s edition, we will be reviewing -
NIFTY
BANKNIFTY
RELIANCE
NIFTY IT
Commentary on a possible bear market.
Let’s start -
NIFTY
After breaking all the supports NIFTY will be difficult to predict for me. The data itself is very volatile and moves come like anything. It’s like a baby playing with the NIFTY. It’s an hourly chart, the yellow box is the gap down and I somehow believe that it will be difficult for NIFTY to fill this gap. Call writers have certainly got the grip and they are crushing down NIFTY with full power.
NIFTY IT is the weakest. With no contribution from BANKS and other sectors. RELIANCE tried its best to hold and still managed to hold somehow. METALS & FMCG as well have a fresh weakness. PHARMA, ENERGY & CONSUMPTION also plummeted.
MIDCAPS & SMALL CAPS are also in pain. AUTO is also showing fresh weakness. As you see none have the strength to hold.
Coming back to the chart again, 16000-16400 were the important levels as per the bigger trend channel. If it has to bounce then it should bounce from these levels only. Break 16000 on a closing basis on SPOT and we are off towards a new low after MARCH 2022.
Long-only above 16860, till then sell on rising only.
BANKNIFTY
My biggest reason to worry is BANKNIFTY. NIFTY has touched the bottom of the bigger trend channel whereas BANKNIFTY is yet to do that. It makes me nervous as hell. It’s a clear divergence between both the godfathers. According to DOW THEORY as we all know all indices must follow or catch up sooner or later. It will be interesting to see who catches who. Private banks like HDFC BANK, and AXIS show fresh weakness. ICICI BANK & KOTAK BANK is somehow holding and trading in a range. SBIN is also not giving a clear direction as of now. But other PSU BANKS look weak.
As per the chart breakdown below 34000 in BANKNIFTY and we are in panic mode to see ruthless shorts in the index. Same as NIFTY it’s a sell-on-rise candidate. Till we get a close-in spot above 36200-36500.
NIFTY IT
Just look at this punishment for IT. Very weak monthly close, a clear sign of sellers taking control. It is in the grip of sellers. 22% down from ATH. Contributors like INFY, WIPRO, COFORGE, and MINDTREE all are falling like a house of cards.
TCS is not showing much weakness but it is not even showing any sign of strength. It is a big sleeping giant who has been very less active in index participation.
It is the NASDAQ that is in pain and causing the rub off for NIFTY IT. I won’t touch any of the IT counters. From an investment perspective, I’ll be keenly watching MID & SMALL caps.
RELIANCE
After a great run from motabhai, RELIANCE had a decent correction from its highs. Trading @ 50 DEMA it might see a short pullback till 2700 but we need a close above it which is difficult. Call writers have taken over 2700 calls and put writers are and will have a hard time defending 2600. Break below 2600 we are open till 2400. Only RELIANCE can hold the NIFTY let’s see!
Long-only above 2720 spot, I have no courage of shorting this big buoyy.
ARE WE OFFICIALLY IN A BEAR MARKET?
Inflation concerns are rising with heartbreaking surprises coming now and then. After the surprise RBI announcement and timely FED’s rate hike we are in for a rocky ride in equity. After the crude saga, Ukraine - Russia war it all came down to inflation.
Rate hikes are a big negative for companies with high debt. It increases their interest which affects margins. Companies that are cash-rich and have sizeable cash on the balance sheet will have less effect on them and very few are there.
Rate hikes also have an impact on the common man’s life as we all will be expecting a hike in our interest rates as well. An alarming update from the Bank of England is the UK & The US might go into recession. Although we don’t expect much effect of all this on our economy. Am not an economist here but all this news and stuff affect our market and its stability.
In a bear market, it’s difficult to trade. Moves come at you like you won’t even imagine and they will crush you like anything.
The best is to -
Trade less, Trade with tight stop losses
Don’t anticipate anything.
It’s not the time to thrive its time to survive.
Just do as per the chart and price action.
Don’t try to find the bottom.
Keep SIPs going in strong fundamental names.
Make a watchlist of names you would always want to add in a bull market but you couldn’t. Add them slowly and steadily with smaller but consistent amounts.
Again am NOT SEBI REGISTERED so please have a second opinion.
So that’s it from my side guys.
See you in the next one.
Adios!