Ashish Nambisan :
Last week it was stated that “Traders can watch 23900 level closely where bulls can attempt longs. Dips till 23700 should be used for longs while supports remain 23400/23200 meanwhile upside seems to be restricted at 24300. Avoid going shorts below 24000 focus to buy near 23900/23700 which is a support zone with stop below 23400/23200. Upside seems restricted near 24200/24300 on the other hand downside supports remains intact till now of 23400/23200, I would say as of now remain focused to buy the supports of 23700/23400 with stop of 23200 and attempt shorts only near 24200 with strict stop of 24350. Although technically, we are still holding above the bullish territory of 200 dema. So, my suggestion is do not go short in Nifty below 24000 rather focus on longs near 23900/23700. Needless, to say unless we do not close above 24200 for 2 consecutive days, we should not consider this upside as a change in trend but once this level is taken, we will see a change in trend. Those who have created shorts at or near 24200 and are still holding should try to book profits as technically we haven’t breached 23400/23200 on the downside yet, so either take profits or keep trailing your stops”. What happened next? On 6th Jan we saw a top at 24090 and we slipped towards 23552 then we witnessed entire trading between the supports of 23400 and 23800, finally on Friday the bulls surrendered and we slipped below 23400 after a couple of weeks till 23344 but again managed a close above 23400 means we are still in a bullish territory. Against the odds-on 6th Jan, we saw the Banknifty index slipped and stayed below the 200 Dema of 50500 for the entire week which says that the bulls have surrendered and now it’s the turn of bears to use its claws for this index. But in Nifty 50 we failed to close below 23400 so how to calculate and analyse this diversion where Banknifty has moved below the negative territory giving an upper hand to bears while Nifty on the contrary remained above the positive territory. Now let’s look into the global factors and have an understanding.
The rising inflation and interest rates have led to fears of hard landing since quite a time now. The banks continued to expect a positive global growth due to lower interest rates however, despite this, things are complicated if we consider some factors like highly priced equities with higher valuations and these reasons can surge the risks of portfolios while making them vulnerable for correction, either by further rises in bond yields or disappointments on earnings/growth. Now if you look at hiring announcements in 2024, it was the lowest since 2015 it dropped to 7999 in December from 11621 in November. Sluggish hiring argues to the slowdown in job gains last year with unemployment rate jumping form 3.7% at the start of year to 4.3% in July then stabilizing and hovering at 4.2 in November. The slower hiring also reflects continuing uncertainty in economic conditions.
While on the other hand, Germany has recorded the highest number of company insolvencies since 2009 in the last quarter of 2024. The fourth quarter of 2024 saw 4215 company insolvencies with almost 38000 jobs affected, according to the study of Halle Institute of Economic Research (IWH) a level unseen since the financial crisis in mid-2009. Compared to the fourth quarter of 2023 the number of insolvencies at the end of last year rose by 36%, as calculated by IWH. The euro zone economy has been dodging recession for the past year, partly because consumers are choosing to save their cash and rebuild wealth which was lost to rapid inflation in the past three years.
Now looking at China, the China’s central bank had suspended treasury bond purchase, triggering a jump in yields and encouraging speculations that the move was aimed at defending currency and to ease monetary settings. But the move coincides with the brutal sell off in other major bond markets around the world. Yields which move inversely to the bond prices, jumped following the central banks announcements. This announcement also comes after the warnings from the PBOC (People’s Bank of China) about the bubble risks in a bond market where long dated yields have hit successive record lows. The widened yield gap between China and US is the key depreciation of the yuan thus with the exchange rate under pressure and yields declining rapidly, the central bank felt the necessity to maintain bond market sentiment.
Now, coming back to Indian markets the technical’s have shifted one shade from bullish to bearish since last week’s performance of Banknifty, indicates complete surrender although Nifty spot has yet not surrendered completely and neither it has breached the support of 23400/23200 while the low placed was 23344 on Friday. Now considering 2 factors which are being the major hurdle for bulls, one is Crude and the other is Rupee. First lets, take Crude last week I had clearly warned on this commodity and also suggested a buy above 6350 and boldly said that I won’t be surprised if Crude touches 6500 and finally my fear came factual Crude blasted till 6700 placing a high of 6709 for the week so this means a surge of more than 3% in a single week. Now based on this surge of crude how we are affected is quite simple to understand, Our imports are calculated on Brent which surged from 75.68 $ to 80.75 $ now lets convert the 1 barrel crude rate in ₹ so last week India was paying suppose for 100 barrels calculating in round fig then 75*100 = 7500 now its 80*100 = 8000 this means last week in ₹ we were paying $ 7500*₹ 84 = ₹ 6,30,000 while currently we are paying $8000* ₹ 86 = ₹ 6,88,000 as in previous week rupee was at 84 and today ₹ is at 86 look at the below chart of USD/INR. Now the difference 58000*100/630000=9.3. Henceforth we will now be paying more than 9% in a single week. So altogether Rupee depreciated against dollar from 84 to the high of 86.79 where we closed at 86.16 which is extremely fatal for the bulls. Now here the USD/INR chart clearly shows that it’s a rising wedge break out this pattern is actually a bearish pattern so I was not expecting an upside breakout and that was why I was sceptical but the USD/INR clearly rejected the pattern and surged with an upside breakout negating this pattern entirely.
Conclusion: Banknifty is clearly showing signs of correction while Nifty 50 is yet to do so, now looking at this divergence I don’t feel there is a hurry in going bullish rather this time Nifty50 has also surrendered the 200 Dema and there is also an “inverted flag” pattern breakdown spotted in Nifty 50 so my guidance is clear and simple sell Nifty on rise near or at 23500 day traders can keep a stop above 23700 while positional traders can watch the 200 SMA at 23950.
Commodity Update:
Last week suggested Gold is seeing a consolidation range between 76000-77500 recommending a buy and Gold spurted till 78800 now again Buy Gold on dips near 78100 cmp is 78400 keep a stop of 77800 and a target of 79100 however the major support remains 77500.
Last week suggested a buy saying “Silver is not breaching the supports of 86500 and seems it has already formed bottoms at these levels. Buy Silver near 89000 with a stop of 88200, while positional traders can keep a stop of 87300 for an upside target of 91500/93000. Silver dipped till 88700 and blasted to touch our target of 93000 with a high placing at 93643.
Last week suggested to buy NG saying “Now on Friday we saw a correction till 287 after forming a top at 355 and this looks like an opportunity to again re-enter this commodity. I would like to contra trade and buy this commodity with a strict stop at 280 a possibility of an attempt to again touch 318/320 on the upside cannot be ruled out. Be strict with your stops. Finally, NG blasted and surpassed 320 and blasted till 346 wow what a terrific performance.
Last week stated “Crude Oil is on the verge of breakout, it also managed to give a positive weekly close above 6350 so if on Monday crude remains above 6350 then an upside rally till 6500 cannot be ruled out. In fact, Crude blasted above our target of 6500 till 6700 with a high of 6709”. Buy this commodity again as it has given a breakout above 6520 buy the dips near 6500 with a stop of 6465 and hold this commodity for next week till the stops are protected above 6750 this commodity will blast till 7000.
Copper is on the verge of upside breakout however the stoploss and the support is seen downside near 820 but the major support is placed at 815 and the cmp is 826 buy copper on all dips till 823 with a stop of 820 while positional stop should be kept at 815 and wait for a breakout above 829 the upside seems open till 844
Stock Update:
Sell Acc on rise near1970 stop 1990 cmp 1931 target 1870
Sell Pidilite cmp 2914 stop 3006 target 2880/2790
Sell Petronet cmp 320 stop 329 target 308/295
Sell Glenmark cmp 1541 stop 1585 target 1440
Sell trent cmp 6584 stop 6980 target 6050
Sell Icici cmp 1250 stop 1285 target 1210/1190
Sell Ultratech cmp 10865 stop 10990 target 10450
Buy Ongc cmp 263 stop 255 target 270
Buy Hcltech cmp 1995 stop 1955 target 2050
Buy Bajfinance on dips near 7050 stop 6970 cmp is 7288
Buy Sbicard cmp is 722 stop 702 target 760
Buy Bharti cmp 1615 stop 1594 target 1660
Buy Sbilife cmp 1478 stop 1440 target 1570
Buy titan cmp 3440 stop 3320 target 3800
