Market Volatility Ahead? Asian Indices Meltdown? Stock Market Weekly Review — Alok Jain

[00:00:00] Speaker 1: Hi, folks. Welcome to the Weekend Investing Stock Market Weekly Review. Week ended of 26th of June. Some stability in the market, but on the weekend again, you know, U.S. has attacked Iran. So next week again could be wobbly. From the research test this week, we published these research pieces. These are available on the Weekend Investing newsletter, in the blogs, and basically they are aimed at additional learning about the market on various subjects. So do follow them and read them whenever you find time. Disclaimer, please read and only then move forward in the video. If you like our channel and you are a regular viewer, I would request you to subscribe to our channel as well. Weekly chart on the Nifty is stable, 0.18% this week. Neither here nor there. We are well poised to go higher if conditions are favorable. It is not looking exceptionally weak at least. That's what you can really say about this chart. We made a bottom somewhere end of March. Then we went up with an intermediate high middle of April. And then we've come down and made a higher bottom in the beginning of June. And we are nearer to the top of that range now than the bottom. And some potential news can take us beyond that as well. S&P 500 has been under some pressure, 1.95% this week. But I mean, the kind of gain it has made since 1st of April, some price and time correction is not roamed out of that. Gold has been weak. Fed has been seen to be a hawkish Fed, where two or three interest rate hikes can happen this year. And gold has grown the brand for it. A lot of people are writing off gold's long term trend has finished. I wouldn't jump to that conclusion. Short term, perhaps even medium term are certainly the trend is gone. But gold is in a very long term trend. And I don't think the base case why gold was going up has changed at all. The dollar index is very, very firm right now. And that is causing stress in emerging markets, as well as gold. In the macro pulse, we can see USD/INR has stabilized after the government's few moves on attracting FCNR from NRIs. And that hearing is reasonably successful. Brent crude has crashed 9.5% a week. In fact, it is lower than where it was when the war started. That is very, very surprising. But after the squirmish on this weekend, maybe Monday, we will see some higher price on Brent crude. India weeks is stable, and dollar index has been rising to 101.32. In dollar terms, no major markets have really gained in the last one week, except Brazil, 2.9% there, UK gaining 1.4%, Russell, 2,000, 1%. But bigger cuts have come in South Korea, almost 7% down. China is down 5%. NASDAQ is down 4.2% this week, and Japan is down nearly 3%. If we see the last one year, then of course, South Korea stands out majestically at 144%. But this is a very concentrated exposure to a couple of stocks. I mean, if you go look at 5-year returns, then South Korea, despite the great year that they had, are at 13.5% only. But certainly, I mean, they've done really, really well. Japan has done really well. 54.6% in an economy where interest rate is, you know, 1% or 2%, is amazing kind of a feat there. And of course, the American markets have done well along with Brazil. India, unfortunately, in dollar terms, is minus 14% for the last one year. So India market has really done badly versus others. In the market's momentum score, you can see US, Japan, South Korea are in the top three positions, although some other countries are coming up very, very rapidly in the short term. [00:04:16] Speaker 2: Hang Seng, Australia, Germany are at the bottom. India is improving versus where it was early. [00:04:26] Speaker 1: In the benchmark indices overview, this week was a very, very flat week on all indices. In fact, all are within plus minus quarter percent, except mid caps, which lost about one side. Within the sectors, metals, whenever the dollar is strong, metals will take a beating. So metals are down 4.4%. Central PSEs and PSE stocks both also were down. Energy stocks down 2%. Capital market also down 2%. What was up was perhaps some of autos, pharma, real estate, and tourism. These four sectors were still unscathed and they were standing tall. Defense, capital market, and energy remain the top three positions in terms of momentum score. IT, FMCG services sector, oil and gas are at the bottom. So you know where to look for setups if you are a discretionary trader. I mean, the sectors where the momentum is strong, you will find more setups. Weekly advanced decline stats is absolutely flat down the middle. So not much to talk about here. Different various indices all are somewhere near 45 to 47% advances to 56% decline. This is basically telling you that it's a neutral market with slight bias towards selling right now. The performance in the last one week also is a mixed bag with some mid and small caps gaining ground, but large caps and more micro caps have lost ground in the last one week. Over a three month period, the markets have done reasonably well from the bottom of March. Percentage of stocks outperforming benchmarks. So mid caps, you have 57% stocks which are outperforming the mid cap 150, which is a decent figure. Other indices, not so much. So the broader base movement is not there right now. It's sort of a neutral place. Golden Cross is there at approximately half the stocks, which is decent. Not excellent but decent. Brutal strength is there in about one-fourth of the stocks in most indices. That's about 21, 24, 29, 23, 25. Only Nifty has 16% only brutal strength stocks. What is brutal strength stocks? Their price is greater than 25, greater than 50, greater than 200. So there's a contiguous trend that's available in these stocks. Those are only eight stocks in the Nifty. And there are some brutal weakness stocks which you don't want to be invested in from a trend perspective. And those are also 10 to 16, 18% of each of these indices. So look out for brutal strength and shed brutal weakness. So as an example sake, in large caps, these stocks are showcasing brutal weakness. So these perhaps should not be there in your trend following portfolio. When we check the trend across various sectors, we find that CNX 500 has 52% stocks above 200 DMA. So the market is split halfway, where half the stocks, if you're talking about 500 stocks, half the stocks are above 200 DMA, half the stocks are below 200 DMA. But we see the significant number of stocks above 200 DMA in private banks and in pharma. So these are the two sort of more sectors where most of the stocks are above 200 DMA. And that's where some setups can be formed. IIT is the weakest and there's no surprise there. Only 10% stocks in the IT sector are above 200 DMA. And this analysis, basically FMCG real estate, PSEs, very, very poor numbers. It basically tells you that these are weaker sectors, right? So maybe value investors may want to take a look at that, but trend investors will not be finding any picks there. FIIs have suddenly gone very quiet. In the last 10 days, there's hardly been any FII movement. There's one day of 4,800 crores buying, then a 600 crores selling, then 18 crores selling, and then a 383 crores buying on the previous session. So suddenly you can see that the volume of buying and sell has gone quiet. I think the market is waiting for the next few where to go. DIIs also have gone a bit quieter, although the last two sessions have been reasonably, I would say voluminous. But overall, DIIs continue to pump in money. When we look at the cumulative impact of FIIs and DIIs over 30 days, then you can see that FII cumulative outgo has flatlined. So last couple of weeks, the net 30-day withdrawal has been flatlined at about 73,000 crores, whereas the DII cash inflow has continuously been increasing to about 90,000 crores. So this boards well that the biggest seller in the market has sort of shallowed out while the buyers of the market are continuing to buy. So the liquidity mismatch is now in favour of the buyers going forward. Inside for the week, this chart is of Westside, Trent Westside. And basically, it's a play on the usual price earnings, multiple dynamics that is there in the market, wherein, you know, in 2023, Trent was at 100 times price earnings. And this is that you didn't buy that. In three months later, it was at 200 times price earnings, then it became 300 times price earnings, then it became 400 times price earnings. The stock went up, up, up, up, up, up, went up six times within a span of perhaps a year and a half. And all this while it was being touted as you know that this is an untouchable stocks, it should not be bought. It has a very high price earnings ratio. And then, you know, the price did collapse after that. But this should not have prevented you from riding this trend. That is the sort of thought process that stocks with very high valuations, sometimes are pricing in the future growth very aggressively. And potentially, they are the sort of torch leaders of the market at that point of time. Yes, at some point of time, they will fall and you can always get out of that stock. But the point is, you should not be afraid of these numbers if you are at rainfall. That's sort of the insight that I want to bring about even any market that you see NASDAQ right now, Japanese market right now, the leadership of that market right now will always show you some crazy price earnings numbers. And the market will, you know, value investors will take a backseat, trend investors will take a front foot and they will have those stocks in their portfolio. And basically, whenever we see any bull run, any significant rally in any sector, you will find that you will not be able to justify business earnings. So if you can't justify it, then perhaps many people can't buy it. And then you miss the whole rally on that. So let me know your thoughts also on this. If you wish to follow some momentum model portfolios, there's a link in the description. You can go check them out, subscribe to them, follow them. Thank you so much for watching this and I'll see you next week. Do keep sending us your feedback on how you like this update, the weekly update. Should we add something to it? Should we remove something from it? Should we continue it? Do keep sending us your feedback. Thank you.