STOCK NEWS OF THE DAY
US 10-year yield surged to 3.369% (fresh 52-week high), Dollar Index surged to 105.14 (fresh 52-week high)
Dow Jones lost 876 points or 2.8% last night, S&P lost 3.88%, NASDAQ lost 4.68%
Asian markets open lower; Nikkei down 1.8%, Kospi down 1%, Australia opens after a holiday – down 5%, China flat
Commodities: Crude flat, Iron Ore down 1%, Natura Gas down 1%, Gold down 2.5%, Silver down 3.3%, Tin down 4%, Lead down 2.5%
To track: German Chancellor Olaf Scholz, French President Emmanuel Macron and Italian Prime Minister Mario Draghi are planning a joint visit to Kiev on 16th June – hoping they are able to reason with Kyiv to accept the conditions of Russia and stop the war.
Technical Check on Indices and Markets: 14.06.2022
1. With the momentum in favor of the bears the market found it very easy to break through support levels. The start was well below our mentioned level of 15980 and the index sustained below it in the first half.
2. This led to a quick re-test of the huge medium-term support area of 15700.
3. Now the medium-term trend of the market gets decided in the next few days. If this 15500-700 area gets violated, then expect a large extension to the bear market that started in Oct 21.
4. On the other hand, a turn from here can keep the hopes alive of the bulls. We must not forget that 15700 area has worked a few times in the past while the environment was very pessimistic. The 15980-16000 area now becomes an important resistance.
5. On the Bank Nifty the next support is only around 32500.
6. India VIX will be closely monitored from here. Any further appreciation would be incrementally bad.
7. Mid-cap index is back at the previous low as well. So even here we have a make-or-break scenario ahead. Many stocks look quite oversold.
8. Summary View: The market is back at the acid test level of 15700. Till this level survives on a closing basis the bulls have a chance.
Nifty – The area around 15700
Anyone looking at the charts would know that the market has support around the 15700 level. This level has worked beautifully in the last few months and the market is testing it again. The problem is, when you keep testing a level again and again it theoretically becomes weaker. This concerns us. However, given the oversold readings on the breadth we still don’t want to extrapolate a breakdown. Let Nifty close below this number to confirm a bear market extension.
Fundamental Check on Markets: 14.06.2022
Is it good that US markets are down 8-10% in last 3 days ahead of this mega FED rate hike day tomorrow?
Can Fed pull something out of the book rather than only an aggressive 75 bps rate hike (because that’s what they must do being so late to react & ignorant) to give low interest rates hikes guidance in the future?
Can Fed eliminate Trump-era tariffs on Chinese imports or anything else which is beyond comprehension?
Buzz of Italian PM Draghi, German Chancellor Scholz and French Pres Macron planning a joint visit to Kyiv on 16th June could yield any results?
Honestly, all the above questions only reflect hope and no one knows but the damage done is big (U.S. stocks have suffered the biggest year-to-date losses since at least the 1960s). Fear Index was up 22.5% yesterday, US 10-year yield and Dollar Index hit fresh high yesterday ahead of Fed announcement tomorrow.
These are tough times, and a smart investor never tries to time the market in search of the bottom. We all want to find the bottom, but it never happens. We may have seen price correction but don’t rule out time correction as earnings expectations will have to adjust downward with increasing interest rates and then finally multiples correct. Yes, it is time to do staggered buying in companies which we understand but don’t expect results immediately. ONLY invest if you can hold great businesses without any panic for the next 6 months at-least.
Nifty PCR at 0.51 levels also moving towards maximum oversold levels of 0.45 – 0.40 in the past. Currently, currencies are the lead indicators to the equities. They should stabilize first for a stable equity market. The good news yesterday was that Indian inflation came below what street was expecting and we all hope that these are signs of peaking inflation.
Globally, India is still well placed. As Aakash Prakash says “If you are going to cap China, expect Korea to move out of the EM universe, extinguish Russia, worry about Brazilian politics and are nervous around the geopolitics of Taiwan, there are limited alternatives. India is clearly benefiting from this dynamic”
Ending Thoughts: We are going to have a volatile and difficult few month ahead. This is the time to build out your portfolio and concentrate your holdings in the best businesses and your best ideas, so that you can deliver strong, superior and differential performance on the way out of this downturn.