EquityCompound2

28th October' 2022 (Evening) -- | Written at 9.30 PM on 30th October' 2022 |

The last month closed on a high note. Starting weak, the month of October saw decent gains and closed almost at month highs. Market was still strong and on the first day of the current series also, the indices were relatively strong.
made 4 consecutive bullish candles on the daily chart. made a bearish candle after 3 bullish candles, however still made a higher high and a higher low.
Levels :
Both and are in a range of 17650 to 17900 and 39825 to 41550 respectively. In this range saw some profit booking on Friday, while is yet to test the upper level.
I expected to test 17900 on Friday, however this did not happen. This may probably get breached in the opening tomorrow. Important to see is that will this trigger a profit booking and a rejection of the level or will the level hold.
On Friday, the first trading day of this series, created shorts on Index futures and also sold a high number of call on Index. However, on the other hand, bought in cash for 1568Cr.
The focus in cash seems to be on Index stocks. Market breadth on was strong, while on the wider market the breadth was extremely weak. So, I doubt if the levels would sustain. The US futures though may hold a cue to sustenance of levels.
has weakened for the past few days. It has eased to 100 levels from 114 earlier. It seems to be in sell on rise mode. The next key support is at 107.5 and will help provide important cues from there. The US yields are at 4.01 and seems stable there.
Options OI indicate a support at 17700 and 41000 for and respectively. On the higher side we need to watch the key levels as mentioned above.
India VIX has eased substantially and could well be a ey support indicator for .
key economic events this week :
Mon - Chinese Mfg PMI and European CPI.
Tue - Caixin Mfg PMI, British Mfg PMI, US Mfg PMI
Wed - German Mfg PMI, US Non farm employment data, FOMC statement and interest rate decision
Thu - British composite PMI, services PMI, BOE interest rate decision, US jobless claims and non mfg PMI
Fri - British construction PMI, US Non farm payrolls
Wish you a happy trading week ahead...

11th October' 2022 (Evening) -- | Written on 11th October' 2022 at 11.00 PM |

Markets today opened flattish with in green and in red, made some gains and then eventually suffered a sharp sell off towards the end of the day. closed 1.5% in red and closed half a percent in red.
Both and made strong bearish candles on the daily chart. With actually making a bearish engulfing candle. Let us now look at levels :
As mentioned yesterday, the tussle between and is extremely strong. A strong selling by is been bought by the . This tussle is actually leading to ferocious movement of Indices in a range. Indices today again inched lower towards the lower end of this range.
sold for 4600 Cr today and bought for 2430Cr. I suspect this selling came towards the end of the day and probably also aggravated due to the Bank of England statement on UK financial stability.
A buying support did not come in at the first support levels of 17050 and the Index sinked deeper towards its next support. It now looks for support at 16850. I hope this support should come in for now, though a deeper cut cannot be ruled out.
also shorted the Index futures again and also covered the puts written by them. They however did not buy puts, this could be a sign that a deeper cut is not expected and we may see a recovery from this level. I would keep my hopes on a recovery.
The Dollar Index has eased a bit and no substantial change is seen in the US Yields. So they do not much influence the markets as of yet.
The rupee eased as well and this could be a positive for the Indian equity. Globally we remain a sweet spot with IMF forecasting India as the fastest growing economy globally. Though valuation vise we may be costlier than other economies, we may still be attractive.
The options OI indicate trouble with heavy call writing today. We may still probably see a bounce back till 17200 and 39000 on and respectively.
US markets are trading mixed with in green and mildly in red. If the closing in US remains strong, we may see a gap up opening tomorrow. keep an eye on the US close today and US futures tomorrow.

10th October' 2022 (Evening) -- | Written on 11th October' 2022 at 6.00 AM |

Following a sharp selling in US on Friday, our indices opened gap down yesterday. A gradual recovery was seen through the day, and the indices saw a close near the day highs.
Both and made strong bullish candles through the day, with small upper and lower shadows.
The levels indicated are as below :
As seen through past some days, a strong support comes in at lower levels of around16900 or so. Yesterday also the lower levels (17065) saw a strong buying from the and the indices recovered from there.
The continue to sell in cash. The selling from their side was again 2000Cr plus yesterday. The bough almost all of this. The determination from the side is high, to protect the bottom. The larger question that looms is how much more liquidity still remains on the institutional side.
While the eased a bit over the past few days, it saw some more strength over the last two days. This led to a sharp weakening of the INR. This probably supported the IT stocks. The IT stocks have lost more than 35% of the values from their highs and are heavily discounted at the moment.
IT stocks only need a visibility of business stability going forward. This would be sufficient to make them perform. Fearing a recession in US and Europe, these companies have to work hard for their top line itself. With results and a positive management commentary would be sufficient to give some momentum to these stocks.
The Banking stocks saw a huge momentum over the past days and have now taken a pause. The results season ahead will have to provide a strong reason for a further push.
I believe the markets are here to remain in a range, until a fresh reason evolves for them to breakout of this. This range currently seems to be 16750 to 17450 for and 37500 to 39500 for . A sharp move on either side can happen only one this range is broken.
The Options OI indicate a support at 17100 and a resistance at 17500 for and a support at 38700 and resistance at 39500 for . A wide trading range is indicated for .
Oil has globally again been trading around 97 Dollars and may remain so over there. The US Yields are also stable at 3.88 or so thereabout.
I personally feel that the markets would remain volatile, though a wide trading range is anticipated. If in cash, buying every dip could be a good strategy. If trading derivatives, be light in positions, need to be careful and remain hedged.
Keep watching the stocks, anticipate action there.

23rd September' 2022 (Evening) -- | Written at 4.00 PM on 25th September' 2022 |

After a relatively resilient first day, the second day turned out to be weak with people reluctant to put in money. The global weakness took its toll on us and a sharp selling was seen on Friday. There was no opportunity to by at any of the time intervals.
Both and made strong bearish candles on the daily chart. While closed staring at the 29th August Low the recent gains made by gives some space to from that low.
Levels as we see now :
As seen on the levels table above, we are now staring at the Aug lows and these levels have to hold, to prevent a deeper correction from these levels. We have been resilient recently, but then tiding against the winds for sustained periods may not be easy.
The US markets are now lower than the low they made on 13th Jun. This was the time when we made our low in Jun. If you have been reading my notes consistently, I mentioned a target of 29800 on and a target of 11000 on . These were hit and we coincided by our low of 15200 on and 32300 on .
Since then we outperformed the global markets by rising very close to all time highs, when the mother markets were struggling. The flight of global money and a huge buying interest from the domestic investors elevated the Indices.
The large question that faces is is do we align ourselves with the global markets or we stabilize earlier than them. Seeing that US markets have closed lower than the earlier lows, we have to watch for a recovery there, else the correction will definitely deepen there. In our case if we align with them, a deeper correction is possible, else difficult to say, where do we stop.
The INR has already breached the all time low and were are now sharply above 81 to a Dollar. The IT sector may face headwinds due to the slow down in US and Europe. Domestics facing stocks and the Banking stocks may remain strong with a rising rate scenario, though they have to tackle the problem of lower credit off takes.

Well these are fundamental thoughts, looking at all this only from a technical standpoint, please watch the levels above. Trade carefully and with strict stop losses. Sometimes leverages can be kept low and only cash investments make sense. I feel that buying the dips has always worked and deploying capital at a rate of 2% of ones capital for every 1% drop in the mother index from its ATH ( ) makes generic sense. One can consider this, till some stability arises.
Dollar Index is at 112.8 ( reasonably close to 114 its near term high) and needs to ease reasonably for a cool off. The comments from actually do not give this feeling. A sharp fall in Oil prices indicates serious concerns on growth and are the consequence of other factors.
A look at the options OI indicate a wider trading range. sees support only at 16800 and sees support at 39500. These seem kind of logical as well. While the levels above indicate some support at the first support levels, i feel any reasonable support will only come at the strong base. Watch this coming in before sticking ones neck out.
Global cues coming in tomorrow will be important as they would be watched by many across the world. Watch for futures opening tomorrow. a small support coming in US markets was seen towards the end. Will this resume on Monday should be seen.
Though in all this ruckus, is strong and is strong. The fall in these was very small compared to the larger selling seen.
Watch these events globally :
Mon - German GDP and business climate Index. Also ECB president speech
Tue - US Fed comments, Consumer confidence and home sales data
Wed - Fed chair speech
Thu - US GDP and jobless claims
Fri - Chines mfg PMI, India MPC outcome and rate decision, British GDP and US core PCE Index.
Last and important - monthly expiry for us.
Wish you all a happy trading week ahead....

22nd September' 2022 (Evening) -- | Written at 6.00 AM on 23rd September' 2022 |

Responding the the weak global cues on Thursday morning, The Indian markets feathered the storm well. When most of the global Indices were weak, we could come out without major breakdowns. The problem is not over though.
Both and opened gap down and struggled through the day. They both found support towards the lower end of the day range and faced pressure towards the higher end of the range. On the daily chart, They both made a candle with a decent upper and lower shadow, indicating the above behavior.
Levels :
I had mentioned earlier that the support levels are deeper and markets are expected to consolidate above these levels. This has coincided with the global ruckus and our Indices are now at these important levels. The risk reward becomes more favorable at 17425 and 40275 though.
Based only on price action, If a long trade is to be taken they can be taken at these levels with a risk reward as per Individuals taste. The Markets conditions globally will keep pressure on our Indices as well. Our resilience through the current conditions has been remarkable.
sold for 2000Cr plus on Thu and also created fresh shorts on Index futures. Their stance is bearish with most of the shorts that they had covered are now back again. The larger question is whether these shorts will now get a follow-through or they will be forced to cover again.
With Dollar Index at near 111 levels at a 20year high, Weakness of the INR against the Dollar will pose challenges. INR is already at close to 81 and this weakness is a strong indicator of the pressure on the equity.
The price action indicates the tug off war between the bulls and the bears and for further strength it is important for the markets to hold the above levels. I would observe the markets action before making fresh positions, though some long positions with strict stop losses can be considered with appropriate entries squeezed out from lower time frames and strict stop losses.
I believe and are extremely strong sectors and may add to this soon. However, , continue to drag. may remain under pressure due to the slowdown concerns in US and Europe.
as a stock seems strong and may give a very strong move after a breakout from the current range.
The Options OI indicate a strong resistance at 18000 for and 41000 for . call writing above 17700 on and 41000 on . These levels would play out as resistances. The wider range of writing yesterday indicate some volatility and lack of direction from the current levels. Being the last week of this series, this is natural, lets see...