Dated: 09/11/2024
Massive selling by FII’s continues in the last week which in turn lead the impactful pressure on domestic markets despite the win of President Donald Trump followed by 25bps rate cut by the US Fed in their recent meeting. Last week Nifty initially started with weakness but eventually won by the bulls where Nifty tried to surpass its immediate hurdle at 24500 but failed to sustain the gains on those levels & some profit booking came with nominal negative closing for the week.
FII’s remained net sellers with impactful continuous outflow from Indian Domestic Equity Markets. So far FII’s have sold massive Rs. 1,24,101.20 cr. since the beginning of October 2024 in which Rs.19,849.53 cr. so far in November 2024 series which lead Nifty to fell almost 2461.20 points fall from the ATH i.e. 26277.35 to make a low of 23816.15. However this sell off only demonstrate 9.36% fall from the top which doesn’t seems much as compared to the outflow seen from FII’s as this was majorly absorbed by the DII’s relentless buying to support the broader markets with net buying of Rs. 1,21,268.90 cr. since the beginning of October 2024. This crucial support by the DII’s has lead the broader markets to remain calm despite the 9.63% fall DII’s have played crucial role in stabilizing the broader markets & didn’t let any major fall in the domestic equity markets.
Nifty last week made high around 24537.60 which in turn crossed its subsequent weeks high of 24498.20 which is the first time Nifty has do so since the beginning of fall from the ATH from 26277.35 levels though it breached the lower end too but any move above 24550 in Nifty now can trigger the major bulls activity & possibly the broader markets could stabilize in the coming weeks ahead. However, in all these scenario’s the crucial support still remains within the pre-defined range of 23400-23800 which in turn if hold the possible upside in Nifty could trigger the potential upside towards 25200 in November series itself.
The expected potential upside could be supported by the Banking & Financial Services sector followed by “Nifty IT” sector which if holds on the current levels could trigger the potential upside into the broader markets. In some cases Nifty PSU Banks may also outperform & support the broader markets.
FII’s net longs now stand near to 22-25% which continuously signifies the bottom formation somewhere near. & history has shown whenever FII’s have 20-25% of net long level positions the bottom has been made somewhere near.
As Dalaal Street is all set for a potential upside the major movement could be supported well by few heavy weights like; Reliance Industries Ltd., TCS, HDFC Bank, SBI & PNB etc.
In the wholesome broader markets witnessed some key events & their outcomes last week which are described as follows:
Domestic News:
• India’s Q2 GDP growth may slow down to 6.5% but the overall FY25 growth seen closer to 7%: SBI
• Tata power has entered into a strategic partnership for renewable energy integration with Noida International Airport.
• RELIANCE NU BEES ltd has been in participating in tenders issued by state owned company for three years. Solar energy Corp bars ANIL Ambani‘s reliance power for 3 years over fake tender document,
• MSCI Rebalancing on 25/11/2024 – The adjustments from this MSCI rejig are poised to enhance India’s representation in the MSCI Emerging Market index from 19.3% to approximately 19.8%. The change positions India as a more attractive destination for foreign institutional investors [FIIs] with expected total inflow reaching around $2.5 billion major inn & outflow are:
International
• Donald Trump won US president election by 295 electoral votes against Kamala Harriss.
• Gold Prices Firm: Gold prices have risen due to Middle East tensions and election uncertainties, lifting prices by around 4% weekly. Gold falls Rs 100, silver declines by Rs 300 on weak global cues.
• Dollar Advances: The US dollar has advanced following recent economic data, with investors now focusing on the upcoming jobs report. Dollar set for biggest daily jump since October as U.S. yields rebound
• China approves $839 Billion debt swap to rescue local government.
• President-elect Trump’s idea of lowering corporate tax to 15% for specific companies could spur additional capital for investing in technology.
• Trump reportedly plans an 800-mile demilitarized zone between Russia and Ukraine, with British and European troops patrolling the area. Under the proposal, Russia would retain its territorial gains, and Ukraine would agree not to join NATO for 20 years. Trump’s team suggests the US would arm Ukraine to deter future Russian aggression but insists European allies bear the financial and military responsibility for the buffer zone. Zelensky warns such concessions would be “suicidal for Europe.”
With Trump winning US Presidential election “Nifty IT” has shown strength last week as it enters to our previously mentioned crucial support zones of 40000-41500 & bounced back towards 42369.65 to give a close at 41752.40. In all these turmoil & bottom formation the one sector which stood tall was “Nifty IT” which remained untouched in last 6 weeks as of now where investors / trades remained into panic with bleeding portfolio but this sector stood tall. In our overall view “Nifty IT” sector continues to have its crucial support within the pre-defined range of 40000-41500 till the time this remains safe the broader trend in this sector is likely to remain unchanged i.e. bullish in short term as well as long term. The pre-defined upside potential of “Nifty IT” remains at 44000-45000 on an immediate basis i.e. in short term while our positional view towards 53000 mark till March 2024 remains intact in the second half of the FY 2024-25. In the between the heavy weights like TCS Infosys & Wipro may continue to remain into focus.
Advance tax collection in FY till June 15 surged 27.6% to ₹1.48 lakh crore, with ₹1.14 lakh crore as corporate tax and ₹34,362 crore as personal income tax, indicating a strong economy and corporate performance.
The Centre’s gross tax collections (post refunds but before transfers to states), stood at Rs 4.6 trillion in the first two-months of the current financial year, 15.9% higher than the year year-ago level, data released by the Controller General of Accounts (CGA) showed on Friday. This is against 10.6% annual growth pegged in the Budget for FY25.
Net tax revenue (after refunds and after devolution to states) during April-May, stood at Rs 3.19 trillion, accounting for 12% of the Budget estimate of Rs 26.02 trillion. However, during the same period of FY24, net tax revenue had accounted for about 16% of the Budget target.
In the institutional segment the FII’s have massively sold nearly Rs. 19,637.60cr. in a single week & so far more than Rs. 124101.15 cr. so far since beginning of October 2024 but here DII’s have been the best buyer’s with Rs. 14391.51 cr. last week which helped Nifty to retain the bottom of 23400-23800. FII’s have been brutal but history has shown whenever FII’s have shown merciless selling pressure we somehow make another bottom supported by DII’s massive buying as monthly retail SIP data surpassed Rs.23,000 cr. p.m.
Nifty with massive selling by FII’s is now into consolidation mode where in last week for the first time it broke subsequent weeks high by making high’s of 24537.60 to give a close at 24148.20 with net loss of 156.15 points i.e. 0.64%. In the coming weeks aahead the crucial support of Nifty could be around 23400-23800 with potential upside could be seen towards 25200 once Nifty sustains above 24550 successfully. However, the entire follow-up is set for a potential upside the major movement could be supported well by few heavy weights like; Reliance Industries Ltd. , TCS (brokerage firms outlook remains positive post results), HDFC Bank, SBI & PNB etc.
Sensex on the other hand gave a close at 79541.79 with net loss of 606.75 i.e. 0.76% down in the last week. With potential bottom formation 77000-78000 levels while potential upside could be around 83000 in the coming weeks ahead. However, the entire follow-up is set for a potential upside the major movement could be supported well by few heavy weights like; Reliance Industries Ltd, TCS (brokerage firms outlook remains positive post results), HDFC Bank, SBI & PNB etc.
Bank Nifty too remains mildly bullish with a potential upside towards 53000-54000 range with crucial support now lying within crucial support range of 50000-51000. The broader range could be support by certain heavy weight Private Banks like HDFC Bank & some PSU heavy weight banks like PNB & SBI etc.
In Nifty Financial Services immediate crucial support 23000-23400 with potential upside towards 24500-25500 kind of levels.
After the Trump winning US Presidential election “Nifty IT” has shown strength last week as it enters to our previously mentioned crucial support zones of 40000-41500 & bounced back towards 42369.65 to give a close at 41752.40. In all these turmoil & bottom formation the one sector which stood tall was “Nifty IT” which remained untouched in last 6 weeks as of now where investors / trades remained into panic with bleeding portfolio but this sector stood tall. In our overall view “Nifty IT” sector continues to have its crucial support within the pre-defined range of 40000-41500 till the time this remains safe the broader trend in this sector is likely to remain unchanged i.e. bullish in short term as well as long term. The pre-defined upside potential of “Nifty IT” remains at 44000-45000 on an immediate basis i.e. in short term while our positional view towards 53000 mark till March 2024 remains intact in the second half of the FY 2024-25. In the between the heavy weights like TCS Infosys & Wipro may continue to remain into focus.
Till October 2024 the number of Demat Accounts has risen to whopping 20cr. this not only helps the capital markets directly but also directly to Equity investments.
The monthly SIP in Indian markets now raised at Rs. 23000 cr. per month.
Brief Levels of Nifty / Sensex/ Bank Nifty / Nifty Financials / Nifty IT:
Nifty CMP: 24148.20
Nifty Immediate Target : 24550 / 25200 (As the case may be)
Nifty Immediate Crucial Support: 23400-23800
Sensex CMP: 79486.32
Sensex Immediate Target: 83000
Sensex Immediate Crucial Support: 77000-78000
Bank Nifty CMP: 51916.50
Bank Nifty Immediate Target: 53000-54000
Bank Nifty Immediate Crucial Support: 50000-51500
Nifty Financial CMP: 23834.55
Nifty Financial Crucial Target: 24500-25500
Nifty Financial Crucial Support: 23000-23400
Nifty IT CMP: 41752.40
Nifty IT Potential Upside: 45000 / 53000 (As the case may be)
Nifty IT Crucial Supports: 40000-41500
Stock on Radar:
Large Caps:
1) Reliance (CMP 1283): If Nifty has to sustain & rise from here onwards the potential upside candidate would be Reliance which could find its crucial support within the range of 1257-1284 & if sustains the potential upside form here on wards could be around 1600 in the next 3-6mths time frame.
2) PNB (CMP 105): This large-cap PSU bank looks good to accumulate here at CMP 105 with strict SL based at 100 for an estimated possible target of 125 in 2 month.
3) Jio Financials (CMP 316): This large cap NBFC counter has been on our radar since subdued levels of 230-250 & still looks for a poised upside from here onwards 316 with strict SL placed at 300 for an estimated possible target of 520 in 2 months time frame.
4) AB Capital (CMP 203): This large cap NBFC counter looks good to add here at CMP 203 with potential upside of 250 in 1 month time frame.
5) AB Capital (CMP 201): This large cap NBFC counter looks good to add here at CMP 201 with potential upside of 235 in 1 month time frame.
Mid- Caps:
1) Burger King (CMP 91): This mid-cap counter looks attractive to add here at CMP 91 with SL placed at 80 with potential upside towards 115-125 in 1 month time frame.
2) HFCL (CMP 126): This mid-cap counter looks like has formed a good bottom here at CMP 127 with strict SL placed at 108 one can expect a potential upside towards 150 in no time.
Small & Mid-Caps:
1) Hathway Cable & Datacom (CMP 19): This small cap counter looks like can move 20-25% in short term with marginal SL placed at 18 once can accumulate here at CMP 19 with potential upside towards 25-26.
About the Author:
Mr. Vishal Gupta a SEBI Registered Research Analyst is the founder of “VG STOCK RESEARCH”, founder of “THE ANALYSIS ROOM”, a writer & an advisor having rich experience in Indian Equity Markets who has spent years comprehending an industry wide shift and risk management with more than 12+ years exploring in depth analysis of the Equity & Derivatives with accuracy of 90% and above.
He has also been into teaching Fundamental Analysis for quite some time giving investors/traders comprehensive knowledge & skills of Indian Equity Markets.
Email I’d: contact@vgstockresearch.com
Contact: +91-9953934544
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