The underlying bullish mode could continue in the short term

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Amid heightened volatility on the back of mixed negative national and international indices; domestic stock markets have experienced bouts of selling off by foreign institutional investors (IFIs). Buying support from domestic investors, falling crude oil prices and a strong start to the quarterly earnings season, however, helped benchmarks pare some losses. For the week ended, BSE Sensex lost 271.32 points or 0.46% to close at 57,919.97 points, while NSE Nifty fell 128.95 points or 0.74% to end at the 17,185 level. ,7. The BSE Smallcap index lost 2.2% and Midcap 2.6%. Among sectors, the Nifty Realty index lost 4.2%, the media index fell 3.6% and the energy index lost 3%. However, the Nifty Information Technology Index added 0.8%. FIIs sold shares worth Rs 9,941.71 crore, while DIIs pumped in Rs 7,030.96 crore. , while DIIs invested Rs 8,055.05 crore. The Rupee ended at a record closing low of 82.3500/USD. So far in October, the dollar index is up 1%. Observers say the rupiah’s depreciation against the US dollar may continue for some time until the US Fed continues to tighten liquidity conditions. It is relevant to observe that in relation to the euro, the pound, the Chinese yuan or the Japanese yen; the rupee has outperformed over the past year as Indian economic fundamentals remain strong, relative to those economies which are also expected to hold up going forward. The short-term direction of the market will be dictated by Q2 earnings, macro data, rupee-dollar movement, international crude oil prices and global indices. Next week, many financial and cement companies would release their second quarter results. Results to watch come from ACC, Asian Paints, Axis Bank, Bajaj Finance, InduSind Bank, ITC, Tata Consumer, Nestle, RIL, Havells and Ultratech. Sectors expected to outperform in the coming weeks are IT, Pharmaceuticals, FMCG, Consumer Durables and Specialty Chemicals. Market participants expect the bullish undercurrent to continue in the near term. Adopt a “Buy Down” strategy with a focus on stocks and sectors focused on the domestic economy.

Listening post: Are those who do not remember the crash doomed to repeat it? Markets rallied with saw moves and investors returned to stocks, thanks to an epidemic of amnesia. Many investors behaved as if the bloodbath between October 2007 and March 2009 or at the start of the Covid 2020 pandemic, when global stock markets lost at least 40%, had never happened. More worryingly, investors are forgetting the excruciatingly real fear they felt during the financial crisis. This could cause some to take more risks than they should

and suffer losses they cannot bear. It is therefore essential to assess whether you suffer from investment amnesia and, if so, to counteract it before it is too late. There is no doubt that individual investors have become more aggressive. People revise their memory of the financial crisis, as if they were looking into a rose-colored rear-view mirror.

Financial planners report that clients are increasingly saying that 2008 and 2009 weren’t a big deal. You might think that memory works like an engraved plaque on which events are carved in stone and preserved for decades until they fade with age. In reality, psychologists have shown that memory works more like an Etch A Sketch, on which events are traced, but then often altered or entirely erased. People are prone to spontaneous memory distortions that make us feel better about ourselves. Studies have shown, for example, that people remember voting regularly in national elections even if they haven’t voted in at least six years, and that 71% of students who got D grades in high school remember more late to get better grades. This is exactly the kind of polishing of the past that seems to be going on in the minds of many investors right now. Because memory is so malleable, investors should keep an investment journal, creating a record of their buy and sell decisions and the reasons behind them. You can mitigate memory lapses by writing events as they occur. You shouldn’t rely on your memories of how you felt in 2008 and 2009 or the first quarter of 2020. Instead, ask your spouse or close friend how scared you were and look at your old blood records. account to see if you’ve sold to the bottom. The best guide to how you will act during the next market downturn is to know how you acted during the last one. The great financial analyst Benjamin Graham wrote in his book “The Intelligent Investor”, hence the name of this column, that “the investor’s main problem – and even his worst enemy – is probably himself. If you don’t remember the pain you felt in the past when you lost money, you won’t have anyone to blame but yourself if you end up feeling the same anguish again.

Quote of the week: “We don’t forecast macro factors, we look at our businesses from a bottom-up perspective on their long-term return prospects – Mellody Hobson

It’s very hard to predict when the next recession or stock market crash will happen, so many of the best investors don’t even try. Instead, look for good companies that have the strength to weather a sometimes tough economic environment.

F&O / SECTOR WATCH

Under the shadow of recession fears in developed countries, mixed corporate earnings and weak economic data; the derivatives segment experienced a very volatile trading week. Nifty went on a roller coaster ride in a wider range of 16950 to 17350, while Bank Nifty also traded in a wider range of 38450 to 39550. Maximum open call interest was 18,000 strikes followed by 17,500 strikes and the maximum sell opening interest was 17,000 strikes followed by 16,000 and 16,500 strikes. Call writing was seen at 17,300 strikes and put writing at 16,900 strikes. The implied volatility (IV) of the calls closed at 19.34%, while that of the put option closed at 20.37%. The Nifty VIX for the week closed at 20.29%. The OI’s PCR for the week closed at 1.73. The India VIX volatility index cooled below the 20 level last week, falling almost 3% to 18.26. A further drop could bring stability to the market. If the Nifty holds the 17,200 level, it could rally back to 17,400-17,500, while a break of 17,150 will see the index slip to 16,900. Global options data indicates that the Nifty could remain in a wider trading range of 16,800-17,700, while the immediate range could be 17,000-17,500.

The ongoing Q2 earnings season will continue to generate strong individual stock specific returns following the announcement of actual results. The main area of ​​focus during the week would be management commentary on trends across all sectors, which could give the market some direction. Over the weekend, HDFC Bank announced a consolidated net profit of Rs 11,125 crore for the September quarter, up 22.3% from the prior year period. The largest private bank reported 23% loan growth and pristine asset quality in the July-September period.

Stay overweight the banking sector, say industry watchers. Heading into the holiday season, auto stocks continued to show short-term weakness. However, the opposites say the sector is still showing higher relative strength against benchmarks and is now poised for another rally. Stay invested in the automotive and automotive auxiliary space. Equity futures that look good are AU Small Finance, Axis Bank, Britannia, Bajaj Finserv, Sun Pharma, Federal Bank and Polycab India. Equity futures that look weak are Astral, Balrampur Chini, Coromandel, Dalmia Bharat, Naukri and Whirlpool.

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