Nifty Closes Above The 22000 Mark Amid Volatile Market!
Hello??♂?!
We are here with the 20th edition of ‘Sharpe Insights’. With more than 250 readers joining us this week, we are a family of 4300+ informed investors now!
As always we are going to keep this around 4-5 minutes! Don’t forget to answer the question at the end to win a 1-month subscription to sharpely Pro. Let’s dive in!
This week, the market continued to march on, but not without a scare. On Monday, we saw a broad-based selloff in the market. There was a bloodbath in the Mid and Small-cap space. But the market recovered well in the following days and ended the week positively. Result season is also going well as some of the small companies announced good results during the week.
Global Macro Factors??
Global macro factors were flat this week. Both crude oil and gold slipped by around 0.2% during the week. Oil is trading at $82.07/Barrel and gold is trading near the psychological $2000 mark. It is trading at $2019 at the time of writing this. But the US 10-year Treasury Yield showed a steep climb during the week and is now firmly above the 4% mark. It is 4.281% at the time of writing this. This is not good news for equity investors as equity markets react negatively to rising yields.
The dollar index was up by 0.21% and the USDINR was flat. But for the first time in the last three weeks, it is now trading below the 83 mark. The S&P 500 was also flat during the week.
On the domestic front, India's foreign exchange reserves dipped by $5.24 billion to $617.23 billion for the week ending on February 9.
Market Performance??
This week was the week of volatility in the market. We saw a solid shakeout on Monday. More than half of the stocks in the market were down by at least 2%. And there was carnage in the mid and small-cap space due to profit booking. Many overstretched names saw a solid fall and some of them were locked in the lower circuits. But this was not super concerning as many of these stocks have more than doubled or tripled in the past few months. So, after a 200% move, 10-20% retracement is okay (and expected).
Market breadth continued to cool off during the week. As of 17 Feb 2024, 78.8% of stocks are above their 200 Day EMA. This number was 89.4% in Dec 2023. Still, this number is not at a bad stage. However, the declining trend indicates a gradual decrease in the underlying strength of the market.
But the market recovered swiftly during the week and almost all broader indices ended in green.
Larger companies won the battle this week as Nifty 100 was the top gainer with healthy gains of 1.32%. Nifty 50 was the close second with weekly gains of 1.19%. Nifty 500 and Nifty Midcap 100 also closed in green. Nifty small-cap index closed the week in red. The Small-Cap index has been the best performer in the past year as it has moved up by almost 71%. (Yeah! the index has moved by more than 70% in a year!). And it has also been the best performer in the monthly timeframe. Some of the constituents look overstretched at the moment. So we warrant caution in this space.
If we talk about stocks, M&M was the top gainer among Nifty 50 and Nifty 100 companies as it gained 11.64% during the week. On the other hand, Hindalco was the top loser with a weekly down move of 12.91%. MRPL was the top gainer among Nifty 500 companies with weekly gains of 26.77%. PAYTM continued to bleed during the week as it topped the loser chart with another weekly down move of 18.71%. It made a new all-time low during the week.
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Sector Analysis??
Many indexes end in the positive territory on the sectoral front. The FMCG sector continued to remain under pressure. The metal sector also saw some profit booking and ended the week in red along with the Media sector. But apart from these three sectors, every other sector ended the week positively. Almost all of them made a weekly move of at least 1%.
Auto stocks were in focus and Nifty Auto was the top gainer during the week. It moved up by a solid 4.33% during the week. PSU companies continued their wild rally and both PSU banks and the PSE index rose by more than 2.5% during the week. IT sector also showed strength and moved up by 2.06%. Nifty IT is looking good on charts and many of the index constituents are showing strength. Keep an eye on this space.
Apart from that, we saw some strength in the banking and finance space. This space has been a laggard in the past few weeks because of the heavy selling from FIIs. But this week it showed some strength. Bank Nifty moved by 1.64% and Nifty Finance moved up by 1.33%.
A business that can shine bright like a diamond!
Due to the high inflation environment in the USA and Europe, many export-driven businesses have suffered in the last couple of years. But now with rate cuts in sight, discretionary spending is expected to go up again.
So, in this week’s blog, we analyze a listed business that has been a six-bagger in the past and that is expected to benefit from the easing environment in the USA. This business has made some strategic acquisitions in the past couple of years and is now looking all set to resume its growth journey. Wondering what the company does? Read the blog to find out!
What we are reading this week
Quiz??
Every week we ask an interesting question. Answer the question and get a chance to win a 1-month subscription to sharpely Pro!
Q) Due to RBI’s strict actions, Paytm has been going through the hammering in the last two weeks. Which listed bank has recently helped Paytm in settling merchant payments by allowing it to shift its nodal account?
Answer the question by replying to [email protected]
Last week’s answer: Zudio
Last week’s winner: Rajasree Jayaram
That’s it, folks. See you next Sunday!