Market Summary:
The markets witnessed a significant downturn, with Nifty losing approximately 1.5% after a week of trading within a narrow range. The decline was marked by a gradual drift initially, followed by intensified selling pressure, particularly in sectors such as metal, realty, and energy which saw losses exceeding 5%. Broader indices also experienced notable losses, extending prevailing bearish sentiments with declines ranging from 4% to 5%.
Market Performance:
Nifty settled near 21,997 levels, close to the day's low, reflecting a breach of immediate support levels including the short-term moving average (20 DEMA) and trendline support.
Sectors such as metal, realty, and energy exhibited significant losses, while midcap and smallcap segments continued to face downward pressure.
Despite being around 2.3% below its all-time high, there was a sense of distress among retail investors, emphasizing the risk associated with chasing momentum and speculative stocks rather than adopting a balanced portfolio approach.
Investment Strategy:
We advise maintaining a negative bias in the index and utilizing rebounds to create short positions.
Emphasis is placed on avoiding adding to loss-making positions and preferring index majors over others.
We advocates for a balanced portfolio approach, encompassing large-cap, mid-cap, and small-cap investments to mitigate risks and ensure stability over market cycles.
Outlook:
We suggests a consolidation phase for Nifty within a certain range, while volatility may persist in broader markets, potentially weeding out speculative elements and paving the way for a sustained rally in the future.
Contrarian plays such as FMCG and gold offer some refuge amidst the market downturn.
Globally, uncertainties surrounding US inflation rates and the Fed's policy decisions influence market sentiments, while domestic inflation shows signs of easing. Potential rate cuts in the latter half of 2024 could positively impact equities.
Technical Analysis:
The Nifty has experienced a breakdown from a rising channel on the daily chart, signaling a shift from the previous uptrend to a potential downtrend.
The Relative Strength Index (RSI) reflects bearish sentiment with a crossover below the 50 mark.
Short-term resistance is anticipated around 22250, with support levels at 21800 and 21,700.
In conclusion, the market report underscores the need for a cautious investment approach amidst prevailing uncertainties, with a focus on maintaining a balanced portfolio and capitalizing on market movements judiciously.
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