..... . VALI disclosures . .....: 16/01/25, Share Market

Thursday, January 16, 2025

16/01/25, Share Market

SENSEX

Max call OI: 79,000
Max put OI: 76,500
(Expiry: 21 Jan)

The SENSEX extended its range-bound movement for the second day in a row and consolidated within the range of 13 January. The index formed an inverted hammer candlestick pattern on 13 January and has formed a second inside candle.

The technical structure of the index as per the daily chart remains weak with immediate resistance around the 78,000 mark. The zone also coincides with the 200-day EMA of the index. However, traders should also closely monitor the high and the low of inverted hammer. A close above the high or below the low of the reversal pattern will provide further directional clues.

The Nifty 50 remained in positive territory amid choppy trade, rising 0.2 percent and extending its uptrend for the second consecutive session on January 15. The Nifty 50 is expected to trade in the range of 23,050–23,350 (Monday's low and high) in the near term, while overall sentiment remains in favour of bears until the index closes above all key moving averages. If the index decisively breaks the lower end of the range, a fall toward 22,800 could be possible. However, if it moves above the upper range, the index may climb toward the 10-day EMA of 23,460 and then the 200-day EMA of 23,680, according to experts.

NIFTY 50

Levels For The Nifty50 (23,213)

Resistance based on pivot points: 23,274, 23,309, and 23,365

Support based on pivot points: 23,162, 23,127, and 23,070

The Nifty 50 reported a small bearish candle with minor upper and lower shadows on the daily charts, indicating choppy trade. The index traded near the lower end of the Bollinger Bands, with a negative bias in the momentum indicators—the Relative Strength Index (36) in the lower band and the MACD (Moving Average Convergence Divergence) below the zero line—indicating a bearish phase.

More on Nifty50:

January Futures: 23,265 (▲0.0%)
Open interest: 5,41,452 (▼1.5%)

The NIFTY50 index extended its upward climb on January 15 and ended the day with moderate gains. The index formed a second consecutive inside candle on the daily chart, signalling consolidation around the 23,200 zone.

As per the daily chart, the broader trend of the index remains weak with immediate resistance around 23,700 zone, which coincides with its 200- day exponential moving average (EMA). Meanwhile, positional traders can monitor the high and low of the inverted hammer formed on 13 January. A close above or below the high and low of the reversal pattern will provide further directional clues.

On the 15-minute chart, traders can monitor the resistance zone of 23,350 and a downward sloping trendline. A close above the resistance zone on a 15 minute chart with a strong candle, will signal the momentum extending towards the resistance zone of 23,500. On the flip side, the immediate support is visible around the 23,000 zone.

The open interest data for the today's expiry saw significant call and put base at 23,200 strike, signalling consolidation around this zone. Meanwhile, a substantial call and put base was also established at 23,300 and 23,000 strikes, signalling resistance and support around these levels.

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NIFTY BANK

Levels For The Nifty Bank (48,752)

Resistance based on pivot points: 49,000, 49,133, and 49,347

Support based on pivot points: 48,572, 48,439, and 48,225

Resistance based on Fibonacci retracement: 49,448, 50,407

Support based on Fibonacci retracement: 47,874, 46,078

The NiftyBank formed a small red candle with long upper and lower shadows, resembling a High Wave-like candlestick pattern on the daily timeframe, indicating indecision. The index saw higher tops and higher bottoms for another session, which is positive, but the overall trend remains weak given that the index traded well below all key moving averages and the momentum indicators have a negative bias.

NIFTY MADCAP 100

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👉FII-DII activity

Foreign Institutional Investors (FIIs) extended their selling streak for the ninth consecutive session, offloading shares worth ₹4,533 crore. Meanwhile, Domestic Institutional Investors (DIIs) continued their buying trend, purchasing shares worth ₹3,682 crore.

👉U.S. indices rallied on Wednesday as the consumer inflation data showed that key prices rose less than expected in December. The Consumer Price Index rose 2.9% year-on-year, in line with street estimates. Moreover, the core CPI, which strips out volatile food and energy prices, came in at 3.2%, slightly better than estimates of 3.3%.

Wall Street was also cheered the better-than-expected third-quarter earnings of banks. Investment banking and trading revenues contributed to the well-received results from JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo.

source: TradingView, upstox,Network18,

& vali

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Trade Cycles

The four important features of Trade Cycle are (i) Recovery, (ii) Boom, (iii) Recession, and (iv) Depression!

The trades cycle or business cycle are cyclical fluctuations of an economy. A full trade cycle has got four phases: (i) Recovery, (ii) Boom, (iii) Recession, and (iv) depression. The upward phase of a trade cycle or prosperity is divided into two stages—recovery and boom, and the downward phase of a trade cycle is also divided into two stages—recession and depression.

Phases of Trade Cycle:

The phases of trade cycle are explained with a diagram:

(1) Recovery:

In the early period of recovery, entrepreneurs increase the level of investment which in turn increases employment and income. Employment increases purchasing power and this leads to an increase in demand for consumer goods.

As a result, demand for goods will press upon their supply and it shall, thereby, lead to a rise in prices. The demand for consumer’s goods shall encourage the demand for producer’s goods.

The rise in prices shall depend upon the gestation period of investment. The longer the period of investment, the higher shall be the price rise. The rise of prices shall bring about a change in the distribution of income. Rent, wages, interest do not rise in the same proportion as prices.

Consequently, the margin of profit improves. The wholesale prices rise more than retail prices. The prices of raw materials rise more than the prices of semi-finished goods and the prices of semi-finished goods use more than the prices of finished goods.

(2) Boom:

The rate of investment increases still further. Owing to the spread of a wave of optimism in business, the level of production increases and the boom gathers momentum. More investment is possible only through credit creation. During a period of boom, the economy surpasses the level of full employment and enters a stage of over full employment.

(3) Recession:

The orders for raw materials are reduced on the onset of a recession. The rate of investment in producers’ goods industries and housing construction declines. Liquidity preference rises in society and owing to a contraction of money supply, the prices falls. A wave of pessimism spreads in business and those markets which were sometime before sellers markets become buyer’s markets now.

(4) Depression:

The main feature of a depression is a general fall in economic activity. Production, employment and income decline. The prices fall and the main factor responsible for it is, a fall in the purchasing power.

The distribution of national income changes. As the costs are rigid in nature, the margin of profit declines. Machines are not used to their full capacity in factories, because effective demand is much less. The prices of finished goods fall less than the prices of raw materials.

✳Reality Tips to Traders

1)Trading in the stock market is a marathon. 2)Protecting your capital is key. (Learn to protect first) 3)Making 0 on the day is better than losing 50k 4)Losses happen; they are part of this business. 5)It’s not you vs. the market. It’s you VS you. 6)You are your biggest enemy; learn to be mentally disciplined. 7)Don’t follow the majority; follow the correct path. 8)Traders without a stop loss end up not being traders for long. 9)There is always another trade. 10)The big money is made waiting for the right set-ups. 11)Waiting for the right trade is the most powerful strategy. 12)It is better to cut a loss than to wait to be proven right. 13)Position sizing can make or break you. 14)Worry about the downside before you even think about the upside. 15)Don’t listen to headlines

..BANKING TERMINOLOGY

There are various types of Banks: PSU Banks, Private Banks, Co-operative/Regional Banks, Small Finance Banks and Foreign Banks. When you deposit money in a bank, let's say the bank gives you an interest rate of 4%. But when the bank lends out this money, they lend it out at say, 12%. The difference of 8% in the above scenario is effectively the profit of the bank! The loans that do not pay interest for 90 days are known as Non-performing Assets. Banks have to provide for such bad loans. Structure of a Bank Asset for a Bank: The asset portion of a bank's capital includes cash, government securities, and interest-earning loans (e.g., mortgages, letters of credit, and inter-bank loans). Liabilities for a Bank: The bank's main liabilities are its capital (including cash reserves and, often, subordinated debt) and deposits. The latter may be from domestic or foreign sources (corporations and firms, private individuals, other banks, and even governments). Banks are required to maintain Liquidity with the Reserve Bank of India: SLR (Statutory Liquidity Ratio): It is the money a bank needs to preserve in the form of cash, gold or government Bonds before providing credit customers. This limitation is added by RBI on banks to make funds available to customers on-demand at your earliest convenience. Banks are required to maintain SLR at 18%. CRR (Cash Reserve Ratio): Banks are required to hold a certain proportion of their deposits in the form of cash. Banks don’t hold these as cash with themselves, but deposit such amounts with RBI / currency chests. CRR rate is at 4.5% currently. Repo Rate: The rate at which the RBI lends short-term money to the banks. The RBI through its Monetary Policy committee changes the repo rate to balance growth and Inflation. Reverse Repo rate: The rate at which banks park their short-term excess liquidity with the RBI. Now let us understand various terminologies for Banks Net Interest Income (NII): This is the spread the bank makes on its lending. It is calculated as Interest Income – Interest Expended Net Interest Margin (NIM): This is the spread the bank makes on its lending. It is the earning which is left after deducting the cost paid to depositors from its yields on Loans. This is denoted in % terms. The formula is Yield on Loans – Cost of funds Capital Adequacy Ratio (CAR): The capital adequacy ratio (CAR) is a measure of a bank's available capital expressed as a percentage of a bank's risk-weighted credit exposures. Essentially, it is the Capital that is available to lend. Tier I Capital – In simple words this capital is freely available with the bank to lend out. Tier II Capital- This is the capital tied up somewhere and is less freely available to lend. In case of an adverse event, the bank can use this capital to lend. Under Basel III norms, a bank’s tier 1+tier 2 capital must be a minimum of 8% of its risk-weighted holdings. The minimum capital adequacy ratio, also including the capital conservation buffer, is 10.5%. Current Account Saving Account (CASA)- There is no interest paid on the Current Account and a small interest rate is paid on a savings account. The combination of both is called CASA which shows the liabilities of the bank on which it pays relatively less interest. Deposits: Bank deposits are a savings product that customers can use to hold an amount of money at a bank for a specified length of time. In return, the financial institution will pay the customer the relevant amount of interest, based on how much they choose to deposit and for how long. Now let us come to NPA. Gross NPA (GNPA): It is the total loans on which no payment has been paid for 90 days or more. GNPA % is usually shown in each Bank’s quarterly results. The percentage is basically the GNPA amount as a % of the total advances. Slippages: Slippages denote the fresh amount of loans that have turned bad in a year. The slippage ratio of a bank is calculated as Fresh accretion of NPAs during the year /Total standard assets at the beginning of the year multiplied by 100. Provisioning Coverage Ratio (PCR): This is the ratio of provisioning to GNPA and indicates the extent of funds a bank has kept aside to cover loan losses. For Instance, a company has GNPAs of Rs 100 and they have set aside 50 Rs, then the PCR is 50%. Net NPA (NNPA): The total figure left after deducting provisions made for bad loans from GNPA. (GNPA – Provisions+upgrades/writeoffs = NNPA) Special Mention Account (SMA) SMA-0 is a category in which stress with respect to the principal and interest has remained overdue for a period of 0 to 30 days. SMA-1 is a category in which stress with respect to the principal and interest has remained overdue for a period of 30-60 days. SMA-2 is a category in which stress with respect to the principal and interest has remained overdue for a period of 60-90 days

..... . VALI disclosures . .....

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Thursday, January 16, 2025

16/01/25, Share Market

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27/01/25, Sensex Crash by 900 points

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