With most of the known negatives, like US Fed and RBI interest rate hikes and liquidity reductions, global supply chain constraints, high commodity prices, Russia-Ukraine war, general inflation, etc., priced in and discounted, markets are clearly showing signs of resilient recovery. Buoyed by positive global cues like signs of reopening of the Chinese economy and evidence of continued economic growth in the US and favourable updates on monsoon progress equity markets marked their third successive week of gains during the week ended. The Sensex climbed 885 points or 1.6 percent to 55,769 and the Nifty jumped 232 points or 1.4 percent to 16,584.Broader indices also witnessed decent traction with the BSE Midcap index rising 257 points or 1.14 percent to 22,775 and the Smallcap climbing 763 points or three percent to 26,384. The RBI’s Monetary Policy Committee will meet in the coming week with the outcome of the meeting expected on June 8. Observers feel that a hike in interest rate was a ‘no-brainer’, however, the only question is, the quantum of the hike. Many expect the hike to be between 0.25 to 0.75-basis points (bps) in the repo rate. US Federal Reserve officials are closely monitoring the state of the labour market as they decide how much and how quickly to raise interest rates in the coming months.
Listening Post: Buying stocks as they drop is harder than it sounds. Here’s one strategy that might help keep you on course in turbulent times. All investors are the prisoners of their past, and that shapes how they face the future. Until the past few weeks, stocks had resembled a perpetual moneymaking machine, rising smoothly for nearly all of a decade and a half. From March 2009 through the peak this January, stocks gained more than 800 per cent. The pandemic panic of February and March 2020 lasted only five weeks. Years on end of poor stock returns would torment anyone who isn’t prepared for a long grind. One weapon to consider is called value averaging. It’s like buying the dips—purchasing more stocks as prices drop—on steroids. At its heart, this technique combines two basic ideas: rupee-cost averaging (putting money to work automatically every month or quarter) and rebalancing (selling some of your winners and buying some of your losers). Investors who use value averaging ‘have pre-committed to bury their demons,’ “the greed demon that makes you buy high and the fear demon that makes you sell low.” This technique can’t eliminate the risk of underperformance, however. “If you cherry-pick certain periods, value averaging can look horrible,” “Your success is always going to depend on the starting point and ending point.”The strategy does better when volatility is high and worse when stocks move smoothly up or down. In a long, steady market, “there’s nothing better than buy-and-hold, just sitting on it.” Few things are harder than buying more when markets fall. That’s why discipline is an investing superpower. Value averaging could help some people stay the course—but it takes work, and it won’t work all the time.
F&O/ SECTOR WATCH
Mirroring the resilience in the cash market, derivatives segment witnessed robust volumes. Options data suggest that Nifty is likely to remain under pressure in upcoming week as far it is trading below 16800 levels. Aggressive call writing was seen at 16800 CE. On downside, 16500 level is likely to provide immediate support to Nifty. On the put options side, traders added long positions in out-of-money strike prices suggesting possibility of some more downside for the Nifty after the Friday correction.The support for the Nifty is likely to be around 16,350-16,400 points while 16,800 points remains a key resistance.Avoid aggressive bets as Nifty likely to face resistance near 16,900-17,200. Steel prices in the domestic market have fallen by almost a tenth in the two weeks since the Centre levied export duty. Prices of domestic benchmark hot-rolled coil (HRC) steel at the traders’ end have slipped by about 8 per cent or Rs 5,500 to about Rs 63,800 per tonne since May 18. Stay invested for target price of Rs550 in next few months. Stock futures looking good are Balrampur Chini, City Union Bank, ICICI Prudential, Jubilant Food, M&M Finance, TCS, Petronet LNG and United Breweries.Stock futures looking weak areAarti Inds, Dixon, Havells, Glenmark, Godrej Properties, Metropolis,Ramco Cements and Voltas.
Tags: #eyes #RBI #policy #meet #eyes #RBI #policy #meet #Hans #India