Bank Nifty Report for Today By Neal Bhai [06-12-2021]

Bank Nifty Report: In the Friday Trading session, Bank nifty fell from their trend line resistance and made a good move on the downside.

The sentiment is still strong, and the index can lose more in the upcoming days, but confirmation is required, lower than 35,000. As per harmonic, we can see 33,900 if this level breaks. More pain in the coming days.

Bank Nifty Update on 06th Dec. 2021

Intraday Support is : 36,000
Intraday Resistance is : 36,500
Key Resistance is : 37,000
Key Support is :35,500

MapmyIndia’s Operator Sets Price Range For Rs 1,040 Crore IPO

Shareholders of MapmyIndia’s operator C.E. Info Systems Ltd.will sell shares in a range of Rs 1,000-1,033 in an initial public offering that could raise as much as Rs 1,040 crore, according to an advertisement in the Financial Express newspaper Monday.

• The IPO will be open for subscriptions Dec. 9-13; anchor investors can bid on Dec. 8
• IPO includes offer for sale by investors Qualcomm Asia Pacific Pte. for up to 2.7 million shares and 1.37 million shares by Zenrin Co. Ltd.; founder Rashmi Verma will sell 4.25 million shares, other shareholders selling 1.74 million shares
• Investors can bid for minimum 14 shares of face value 2 rupees each in the sale, which opens Dec. 9 and closes Dec. 13
• Axis Capital, JM Financial, Kotak Mahindra Capital and DAM Capital are managing the IPO which constitutes 18.9% of post-issue capital

Analyst Actions: IndiaMart InterMesh, Hindustan Unilever

• IndiaMart InterMesh Ltd. rated ‘new buy’ at Batlivala & Karani; price target: Rs 8,926
• Hindustan Unilever raised to ‘buy’ from ‘add’ at Kotak Securities, price target: Rs 2,925.21

Metro Brands India IPO To Open On December 10 & Close December 14

• Metro Brands seeks to raise Rs 295 crore selling new shares in IPO
• Shareholders of Metro Brands to sell up to 21.45 million shares in IPO

Nifty Technical Reports By Neal Bhai

Just as we were all getting ready to venture out, with many having done so already, the advent of the Omnicron Covid-19 variant is seeking to drive us all back indoors. At least, that is what it seemed like. Even as people didn’t really panic, it seemed like the media certainly had pressed the panic button, and virus-related news—that had generally receded quite a bit—suddenly made a sharp comeback on channels and newspapers. Markets never like any kind of uncertainty and respond in the same way every single time, with a decline. We had discussed this over the last two weeks and when the market started off weak, yet again, on Monday of this week, it seemed like there is going to be more of the same. This sentiment was buttressed further when the 17,000 level was violated. There were enough cries of ‘more’ and several lower targets began showing up in WhatsApp or Telegram chats.

But as ever, the market always halts when the chorus takes over. Trapping several over-excited traders at lower levels on Monday, the market pulled out a three-day rally that ended with a dip on Friday where some misgivings returned. Pictorially, the week moved like this.

As can be noted, it wasn’t exactly a walk in the park this week. Before you realised it, the market was turning around. Doesn’t exactly make for comfortable trading. Consider yourself lucky if you got out with your wallet still in your pocket.

The weekly candlestick pattern was shaping up well before Friday’s dip spoilt the set-up. The relatively high volume bar for the week coupled with the candle pattern can make for a possible ending pattern. This is meaningful only if there is an improvement in the coming week. But see the bright side of that, at least you know what to look for when trading starts Monday, right? Now, what are the odds on that, one may wonder?

Looking at the pathway chart again, it is evident that a higher top and bottom have been formed.

So two swing points for reference crop up, the high at 17,515 and the higher bottom swing low at 17,002. Now that is a wide range (all of 500 points) but that is par for the course for a week’s trading. So now we have defined something additional for readers to watch out for, something more pointed, so to speak.

Now, if I embellish that intraday chart for the last week with a pitchfork tool (Schiff), then this is how it would look.

The slam into the top of the pitchfork channel is certainly a downer, meaning that a high is possibly made.So now, the lower pitchfork channel is the key to holding the uptrend and that starts the week at 17,160. At the time of writing, the SGX Nifty is already nearly there.

Now we may have to wait for Monday morning’s price to decide on this issue but another higher bottom here will certainly help the cause of the bulls. If it slips, then the next lower support level at 17,000 would be open for a retest.

But the bulls certainly don’t seem up to the task, are they? Here is an update from the earlier week’s chart, the one using Heikin Ashi candles.

The last time the prices were resting on the long-term support trendline. Now they have gone under. Not exactly good news. The RSI is still in a good shape but it is now giving up the overbought zone. Not really a strike-out that one but a change from the ongoing pattern of the last 15 months. That ought to count for something, don’t you think?

In the column of Oct. 2, I ended with this warning, “time to stop being complacent for now.” Looking back, that seems to have been an apposite warning. But the market feinted, had us off our footing a wee bit in the letter of the following week (Oct. 10) but the trend slipped once again by the time I wrote this in the column of Oct. 30, “Time cycles have November leaning towards being a down month and possibly December too. I would want to watch the high and low of the first week and choose to go with the direction set by the prices after the first week. Not expecting much on the upside so maybe for now the 18,600 area is a top for the balance portion of the year.”

The point here is that the market has been signalling reasonably clearly that its intentions are leaning more downward than continuing higher.

Hence, the second bearish candle in the third chart is actually reiterating the downward intent of the Nifty.

So, whatever arguments we may try to make in favour of an uptrend emerging have to be done so with a good lacing of salt. Or put in other words, as of now we may look for some rise but we should also be ready—more than ready, actually—to jump aside soon as we sense something amiss. Since the bullish signals are mild, that shouldn’t be too much of a problem. We have two definitions of lower points of reference that should be watched rather closely (17,160/17,000).

If the Nifty is on a weak wicket then there has to be supporting evidence from other indices too, one would expect. Well, it is not exactly the same but most of them tend to follow the pattern established in the Nifty too, only lagging it a bit. So one could say it is, using a colloquial phrase… a fifty-fifty thing. What stands out in weakness is FMCG, where clear evidence of profit-taking is visible. Some heavies in that list for the Nifty, please note (Hindustan Unilever, ITC, etc.). Battling against this weakness is the continued strength in IT that refuses to cede any ground yet. Big weightage stocks there too (Infosys, TCS, etc.). So not altogether a washout as far as the sector indices are concerned, I would think.

Final word? Touch and go. Since evidence is beginning to pile up, slowly albeit, I would want to be alert for mishaps than retain the earlier complacence that market trends will pick up from dips. Stay alert.

India Yield Curve Steady, Stocks Slip

Maturities across the India sovereign yield curve were little changed in Monday morning trading.

• The 4-year yield rose 1bp to 5.393%
• The 10-year yield was little changed at 6.367%
• The 14-year yield remained unchanged at 6.754%
• The 4-year-10-year yield spread was 97.4bps, vs previous close 98.6bps

India Equity Strategy – Holdcos For Portfolio Diversification:

Investing in the stocks of holding companies can be a very efficient and inexpensive way of gaining exposure to the stocks of India’s reputable growing business houses.

It can generate consistent returns with a margin of safety over a long period of time, as well as portfolio diversity. To make it even more lucrative, market cycle or business group-specific corporate events can trigger scenarios with disproportionately greater returns.

According to evidence from the western world, in evolved markets with diverse shareholdings, like the U.S. and UK, holdco discounts are extremely low (in certain cases holdcos even trade at a premium to underlying asset values).

While Indian holdco stocks are majorly owned by promoters and typically trade at a discount of 30-90%, their global counterparts trade at a lower discount level of 10-25%.

Source: Bloomberg

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