Market M00D on Monday

Indian Budget that may change the market sentiment

Anticipation: Market participants will be closely monitoring any updates or speculations related to the upcoming central budget. Key areas of interest include fiscal deficit targets, infrastructure spending, tax reforms, and incentives for various sectors.

Impact on Sectors: Sectors like infrastructure, manufacturing, and agriculture may experience increased activity based on budget expectations. Any announcements or leaks regarding sector-specific allocations can drive market sentiment.

Sector Rotation

Cyclical vs. Defensive: With evolving market conditions, there might be a shift from defensive sectors like FMCG and pharmaceuticals to more cyclical sectors such as financials, real estate, and industrials.

Tech and Innovation: Technology and innovation-driven sectors could see increased interest, particularly if there are announcements regarding digital infrastructure or incentives for tech companies.

FPI Data

The Indian market on Monday is expected to reflect these FPI trends with significant movements in the finance, telecommunications, consumer services, and capital goods sectors due to substantial inflows. Conversely, the power and metal mining sectors might experience downward pressure due to outflows. Investors should watch for any budget-related announcements and global economic data releases, as these factors will further influence market dynamics.

Most Inflow Sectors

1. Finance Sector
   • Inflow Drivers: Strong economic recovery and robust performance of banks and financial institutions are attracting foreign portfolio investments (FPI).
   • Key Stocks: HDFC Bank, ICICI Bank, Bajaj Finance. All these are non-sharia sector we don’t entertain
2. Telecommunication
   • Inflow Drivers: Increasing digital adoption, expanding 5G network infrastructure, and favorable government policies.
   • Key Stocks: Reliance Jio, Bharti Airtel.
3. Consumer Services
   • Inflow Drivers: Rising consumer spending, e-commerce growth, and recovery in the service sector post-pandemic.
   • Key Stocks: Avenue Supermarts (DMart), Titan Company, Jubilant FoodWorks.
4. Capital Goods
   • Inflow Drivers: Government focus on infrastructure development, manufacturing incentives, and industrial recovery.
   • Key Stocks: Larsen & Toubro, Siemens India, Bharat Heavy Electricals Limited (BHEL).

Most Outflow Sectors

1. Power Sector
   • Outflow Drivers: Regulatory uncertainties, slow progress in reforms, and high debt levels affecting profitability.
   • Key Stocks: NTPC, Power Grid Corporation of India.
2. Metal and Mining Sector
   • Outflow Drivers: Volatility in global metal prices, environmental concerns, and regulatory challenges.
   • Key Stocks: Tata Steel, Vedanta, Hindalco Industries.

National Stock Exchange (Nifty50)

Recent Performance

• Last Week’s High: 24,591
• Last Week’s Low: 24,141

Key Levels

• Immediate Resistance: 24,650 (where call volume has increased by 28%)
• Immediate Support: 24,141 (last week’s low)

Indicators and Analysis

Support and Resistance Levels

• Resistance Level: 24,650
  • Breaking this level with strong volume can lead to an upward move towards 24,950.
  • The significant increase in call volume at this level indicates strong resistance.
• Next Resistance: 24,950
  • If 24,650 is broken, 24,950 will be the next resistance to watch.
• Support Level: 24,141
  • This level acts as a critical support. If the index falls below this, it could indicate further downside.

Volume Analysis

• Call Volume at 24,650 and 24,950: A 28% increase in call volume at these levels suggests that traders expect resistance here, and it could be challenging for the index to move past these levels without significant buying pressure.

Trend Analysis

• Uptrend Confirmation: For the uptrend to continue, the index needs to break above 24,650 with strong volume. If it breaks above 24,591 and consolidates above this level, it would be a positive sign.
• Consolidation Zone: If the index breaks 24,591 but does not convincingly break 24,650, it may consolidate between 24,650 and 24,950.

Strategic Recommendations

• For Traders:
  • Consider placing stop-loss orders around the support level of 24,141 to manage risk.
  • Watch for a confirmed breakout above 24,650 before entering long positions.
• For Investors:
  • Monitor the overall market sentiment and macroeconomic indicators.
  • Use pullbacks to add to long-term positions if the fundamental outlook remains positive.

Disclaimer: The stock market analysis provided herein is based on non-technical factors such as market sentiment, news, and macroeconomic trends. This information is intended solely for educational and informational purposes and should not be construed as financial advice, an investment recommendation, or an endorsement of any particular investment strategy or stock. The analysis reflects the opinions of the author(s) and is subject to change without notice.

minhaj@tng-thenextgen.com