Hello reader, hope you’re doing well. Taking positive cues from SGX Nifty, local markets may log gains in early trades Tuesday amid mixed Asian markets trend. In the past few sessions, any intraday strength is driven by only a few companies across a narrow set of sectors. If Nifty bulls are unable to seize control then there is a bright chance that there will be an element of panic at Dalal Street. Any upward march could be thwarted in the near term as recession concerns are back, a hawkish surprise from Powell, Russian mutiny, mounting Chinese growth fears, and a delayed monsoon. On the global front, all eyes will be on the Bank Stress Test result to be released by the Federal Reserve on Wednesday, which could reveal the severity of tightening in financial conditions after the US banking crisis.
An important feature of the rally that took the Sensex to record high was its weak structure and lack of enthusiastic investor participation. The market lacks momentum to take it convincingly to new highs. There is no support from the mother market US, either. The S&P rally of 13.6% YTD was led by just 10 tech stocks. Such concentrated rallies are unlikely to last long. In India, even though the rally is more broad based, there is no valuation support to take the market much higher. So investors should wait and watch for clearer direction from the market. Early next month expectations regarding Q1FY24 results will influence the market. Investors may wait for cues from the results to know which sectors will outperform for the rest of the year.
As always, risk management is key, and a proper system in place prevents one from losing out too much, in case of outlier events. Have a good trading day, and may the force be with you!
Disclaimer: this post is for educational purposes only, we are not SEBI registered analysts. Trades mentioned here are not trade recommendations. Equity Investments are subject to 100% market risk, please consult your financial advisor before investing.