WeekendInvesting’s Market Outlook as on 14th Aug’23

Volatility and Falling Trend Line

This week, ending on August 11th, the Nifty experienced significant volatility during the initial couple of days. However, for the following three days, it appeared that the Nifty might bounce back and overcome the falling trend line. Unfortunately, in the last two sessions, the market lost its momentum.

Factors Affecting Market Sentiment in the Short Term

The decline in market sentiment can be attributed to two key factors. Firstly, after the Federal Reserve’s announcement indicating that they might take longer than expected to reduce interest rates, if they choose to do so at all within the next twelve months, investors grew cautious. Secondly, the Reserve Bank of India (RBI) expressed concerns about the persistence of inflation, suggesting that interest rates in India would likely remain unchanged for the near future. These factors combined had a negative impact on the market, unsettling investors.

Natural Correction and Future Outlook

Considering the recent upswing from approximately 17,000 to nearly 20,000, a significant correction was expected at some point. It is possible that the recent decline marks the beginning of this correction. While it remains uncertain whether the market will reverse and regain its upward momentum, it is prudent to adopt a conservative approach. The previous top at around 18,800 could be considered the worst-case scenario unless there are notable changes in the market.

Sectoral Overview

Despite the market downturn, certain sectors managed to retain their growth. In particular, the public sector banks observed a positive trend, experiencing a 3.1% increase. Additionally, financial stocks performed well, with a remarkable 22% gain. The metals industry also showed promise, as did the pharmaceutical sector, which saw a notable increase of nearly 28% this financial year. However, the private banking, real estate, and FMCG sectors were the hardest hit, experiencing significant losses.

Benchmark Indices Overview

Although there was some damage, it was relatively limited when viewed on a weekly basis. The Nifty observed a decrease of less than half a percent, while the CNX 200 and CNX 500 indices experienced declines of 0.3% and 0.2%, respectively. In contrast, small-cap and mid-cap stocks held their ground, with gains of 0.5% and 0.7%, respectively. Despite the challenges faced by the market, these figures suggest a positive performance.

WeekendInvesting Overview

Mi 50, Mi 25, and Mi 20 portfolios have been particularly successful. Notably, Mi 20 has emerged as the top performer, yielding an impressive growth rate of 42.2% since the beginning of the financial year. This performance disproves the notion that larger portfolios with a greater number of stocks inherently underperform. Rather, Mi 50, with a growth rate exceeding 40%, highlights the success of diversified portfolios.

Conclusion and Outlook

In conclusion, despite the challenging week, the overall market sentiment remains reasonably bullish. Notably, mid-cap and small-cap stocks have withstood the market pressure, indicating resilience. It is essential to note that while certain sectors, such as public sector banks and pharmaceuticals, have shown positive growth, others, like private banking, real estate, and FMCG, have experienced significant losses. Looking ahead, it is wise to approach the market cautiously and remain vigilant for any surprises or shifts in trends.

Special Independence Day Offer for WeekendInvesting Investors

As we wrap up this week’s report review, I would like to wish you a fantastic weekend ahead! Let’s await the upcoming week with anticipation, as perhaps it will bring unexpected surprises. Thank you for joining me, and until next time, take care and stay informed!

Use code FREEDOM20 to avail a special discount of 20% on all WeekendInvesting strategies.

Code valid only till end of 15th Aug 2023. 

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WEEKENDINVESTING ANALYTICS PRIVATE LIMITED is a SEBI registered (SEBI Registration No. INH100008717) Research Analyst