US markets bounced on expected lines from oversold zone technically & sentimentally.
No news came in but on background, base metals fall + US 10-year yield & Dollar index fall are good signs. We welcome Fed’s Bullard saying that recession in the US unlikely & even JP Morgan saying that no recession and next week’s rebalancing could drive stocks up 7%.
We will not be excited by headlines because they keep on changing and keep focus ONLY on valuations and great businesses. WE AGAIN RE-ITERATE USE BOUNCES TO SELL WEAKER STOCKS IN THE PORTOLIO & ADD STRONGEST NAMES
FIIs now have largest long stock future contracts from 1 June 2022, On Friday they further increased stock future position by 26000 contracts.
Brent crude although cooled off from 125$ took support right at its 20 Day weekly EMA around 107$ which has been holding since last 6 months. A decisive close below 107$ will pave the way for 95$ on crude. USD/INR on the other hand has been hovering around highs of 78.40, close below 77 levels will be first sign of a short-term top in the currency.
On sectoral front Auto and ancillaries clearly have been a standout performer and this we had been talking about since last month along with capital goods & industrials. These 2 sectors might lead the bounce on the Index. Other areas where We expect some bit of a recovery in coming days would be mid cap IT names, Cement, specialty chemicals etc.
We will focus on auto ancillaries – MM Forgings, Craftsman Auto, Automotive Axles, SKF to add on any weakness. Cap goods/ industrials/ auto have been strongest sectors even in the fall. We are studying real estate & sugar sector valuations as well – which are coming to a point to add.
Buy stronger companies slowly, sell weaker names & keep faith.
Nifty – Looking for follow up action
Last Thursday or 16th of June was the big down day for Nifty. This broke the shackles and brought in a lot of negativities. However, it is important to note that the market has not seen follow-up on the downside since then. So in a way the bears are not in total control. Infact, Nifty for the last one week has been in a range. So till we don’t see follow-up on the downside or even upside the next trending move would not take place.
Nifty Auto Index – Best in Class
What a wonderful move the Auto index witnessed yesterday !
It was standalone in an otherwise very volatile market and without the backing of any major news flow. However, technically the sector has been looking good all along. We have this Index as No.1 (in terms of technical strength) on our list for a long time. BO yesterday calls for incremental strength. We see a gradual move back to recent highs and even 12000 (Current level 11359). Most top stocks are well placed for more gains.
Nifty IT index is slowing turning around and we must not ignore the same. The momentum on the downside is reducing as well. We think the worst could be over. The index and many top stocks are positioned well to recoup the recent losses. This remains a good time to initiate investment positions.
