In an interview with ETMarkets, Mahtasid said, “Bread stock trade is expected to decline in the 7-8% range over the medium term..” Adjusted excerpt:
A busy week for investors but the bulls managed to gain the upper hand. Benchmarks closed with good gains – so what triggered the price action on D-Street?
Although still stuck within its wider trading range of 15,700-16,400, Nifty made a sharp rebound from the intraday low for the week, showing signs of strength on the lower levels as it protected last week’s low.
Banks and financial institutions led the upward movement this week. Our top 10 custom Nifty indicators are once again gaining momentum on the upside after a few sessions of consolidation, which shows strength in the big indicators.
We anticipate continued work on a large selection. On the P&F chart, Nifty50 has confirmed a Triple Top buy, which indicates a higher probability of it breaking its last consolidation phase and is expected to attempt 16700 on the upside.
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How did the May series end and what are the expectations for the June series? Where do you see the markets moving in the first week of the June series?
In the May series, Nifty stock is down 6.2 percent on an expiration to expiration (EoE) basis. The Metal and Smallcap 100 benchmarks underperformed significantly, losing more than 15% of their EoE value. The BankNifty and Financial Services indices have relatively outperformed the benchmark. Nifty/Bank-Nifty swaps were 79% (~1.3cr shrs)/86% (~25.5lakh shrs) versus 78% (~1.01cr shrs)/85% (~27lakh shrs) for the previous month.
Market-wide listings were 92% versus 94% for the previous month. During the month, long/short FII futures ratio rebounded from two-year lows; While Nifty’s OI PCR posted its lowest reading in several years at 0.65, after Nifty entered the consolidation phase.
In the June series, BankNifty staged a consolidation hack. Moreover, it managed to close the landing gap that formed on the 6th of May. We expect BankNifty to continue to outperform and rise above 37100 at this expiry.
On a sectoral level, banks have seen significant buying in the past week. What do you think of bank stocks, and will the momentum continue in the June series as well? Which names sound strong?
Although BankNifty is far from its peak in April 2022, it has managed to defend the two-year bullish and middle sloping trendline, which has led to a pullback in the past two weeks.
We think numbers always have an important story to tell. Therefore, we investigated the historical trend of BankNifty in the last 15 years and its performance in the second quarter of the calendar year (i.e. April, May and June).
In CYQ2 for the past 15 years, in only two cases has BankNifty posted negative quarterly returns (i.e. 2011 and 2008). The average quarterly returns for the Leading Index in the last 15 years of CYQ2 are ~10%.
In CYQ2, it tends to outperform the Nifty benchmark. Historically, strong moves were seen in BankNifty and its components during this phase.
Therefore, she is likely to play a major role in the coming month.
He has shown relative strength over the past two months.
Meanwhile, declining trade is expected in the 7-8% range in HDFC Bank and ICICI Bank in the medium term.
Metals were hit, dropping more than 4%. What led to the price action and what should investors do?
The relationship between the markets is currently in disarray, negatively affecting the commodity space. The US dollar index has pulled back from its peak, yet the structure is bullish, and declines can be seen in commodity currencies (such as AUD futures, however the overall structure is bearish.
If these situations persisted, it seemed that there was no point in summoning a bottom in the metal space. The ratio of Nifty Metal to Nifty is trading below the annual average, which means that the metal continues to underperform against the benchmark index.
The cooldown in DXY has brought some relief in the metals space, however it is still a weak place and prone to high volatility.
Rather than chasing a vanquished position, sticking to recent outperformers such as cars and banks would provide a better trading opportunity.
The dollar index hit its lowest level in one month. Do you think this will give some relief to the stock markets?
In the past five years, this was the US dollar index’s third attempt to break to the upside, and it has pulled back from the peaks of the past few sessions, however a significant decline is unlikely.
We can consider the current move as consolidation rather than a major reversal. In the short term, the inverse correlation brought relief to equities, particularly the emerging market space.
However, it is too early to conclude that the dollar’s bullish trend is over. Already, there is a pullback movement at play in many global indices and commodities, however multiple overhead structures on the major indices are unlikely to provide a bigger boost.
For DXY, RSI divergence was seen at the top, which led to a correction recently. We can see it retest the April 2020 peak around the 100 mark in the near term.
Which trading rules one should follow to manage risk amid the volatility in the markets?
Whenever in doubt, always look at the big ones (ie the heavyweights indicator). Often, they provide a harsh or confirmatory structure, which is noted later in the normative indicator.
Mid-range/wider markets tend to cheat during a period of high volatility.
(Disclaimer: Recommendations, suggestions, opinions and opinions provided by experts are their own. These do not represent the views of the Economic Times)