Revanth Chalamala provides a comprehensive weekend and month-end market review, covering the significant volatility and news that dominated the market. Revanth delve into whether market sentiment has turned bearish and if investors are being pushed into a fearful situation.
Key Discussion Points:
• Market Performance: Nifty is still trading 7% lower from its peak a year ago. This month, Nifty closed 1.38% negative, with Midcap and Smallcap segments experiencing greater pressure, down 2.86% and 3.72% respectively.
• Trump Tariffs: We discuss the pressure from Trump tariff-related issues, with a 50% tariff officially confirmed on India. However, it's argued that while tariffs created selling pressure, their long-term impact on the stock market may not be substantial, especially on heavy-weight sectors like banking, IT, pharma, and metals. Textiles, Gems & Jewellery, and Leather sectors are impacted, but these don't play a major role in the overall stock market.
• GST Reforms & Auto Sector: The auto segment performed positively, reacting with a 5.5% gain this month. This is attributed to positive GST outcomes, which are expected to reduce vehicle costs by 8-10% and boost sales, especially with the upcoming festive season.
• Other Factors Affecting Market:
◦ Weak Valuations & Quarterly Numbers: Initial market correction was due to bad valuations and later, June-July quarterly results that failed to meet expectations.
◦ Fed Interest Rate Cuts: Expectations of future interest rate cuts by the Fed Chairman are providing positive hope for the IT segment, as fund allocation often shifts towards R&D and technology during such times, potentially increasing order values.
◦ Dollar Appreciation: A recent appreciation of the dollar is advantageous for export-oriented companies like IT and pharmaceuticals.
• Market Outlook & Predictions:
◦ The market appears to be entering a downtrend channel, and a consolidation phase could continue for another six months to a year, possibly extending to 1.5 years.
◦ Despite this, positive company numbers could lead to the market breaking resistance levels.
◦ We anticipate an economic revival due to GST reforms, potentially boosting economic activity by approximately $20 billion.
◦ Investment Strategy: For the next six months, SIP (Systematic Investment Plan) or STP (Systematic Transfer Plan) methods are recommended over lump-sum investments, as the market is currently at support levels, offering good opportunities.
• Technical Analysis & Support Levels: We analyze support and resistance levels, noting that if current supports break, the market could see another 700 points of selling, potentially reaching 23,500 (or 23,300-23,800). Resistance levels are identified around 24,500 and 25,000.
• FII Activity: Foreign Institutional Investors (FIIs) have been maintaining short positions but are slowly unwinding them, showing some signs of relief despite recent market falls. Retailers also contributed to panic selling due to tariff fears.
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Stock Market Crash: Why Nifty Is Falling | Trump Tariffs, GST Reforms | Monday Market Prediction
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