..... . VALI disclosures . .....: 09/01/25, FinancialMarket REPORT

Thursday, January 9, 2025

09/01/25, FinancialMarket REPORT

NIFTY50

January Futures: 23,781 (▼0.0%)
Open interest: 5,17,103 (▲2.1%)

After an initial dip, the NIFTY50 index staged a sharp recovery of nearly 200 points from the day's low and ended the Wednesday's session on a flat note. The index formed a bullish hammer pattern on the daily chart, which is considered as a reversal pattern.

The hammer pattern typically forms at the end of a downtrend. It features a small real body near the top of the candle with a long lower shadow, indicating strong buying pressure after lower levels. However, the pattern gets confirmed if the close of the subsequent candle is above the high of the reversal pattern.

On the daily chart, despite breaking below the inside candle pattern formed on January 8, the index staged a strong rebound from the key support zone of 23,400-23,500. Furthermore, it has consistently maintained the December 20 low of 23,537 on a closing basis. On the upside, immediate resistance is seen near the 24,200 zone.

The open interest data for the 9 January expiry sustained the call bases at 24,000 and 24,100 strikes, pointing at resistance for the index around these levels. On the flip side, the put additions was seen at 23,500 strike and 23,200 strikes, indicating support for the index around these zones.

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The Nifty 50 showed a smart recovery of nearly 200 points from the day's low and closed flat with a negative bias on January 8, taking support at the upward-sloping support trendline (which comes to around 23,500). The index finished just below 23,700 (the 200-day EMA). This seems to confirm that the index remains in the range of 23,500–24,000 levels. Any fall below the lower band could take the index towards the 23,300 zone, but sustaining above 23,700 could bring positivity and push the index towards 24,000 (which is crucial for a further strong upward rally), experts said.

Levels For The Nifty 50(23,689)

Resistance based on pivot points: 23,743, 23,804, and 23,901

Support based on pivot points: 23,548, 23,488, and 23,390

The Nifty 50 has formed a small bearish candlestick pattern with a long lower shadow, resembling a Hammer pattern on the daily charts. This is a bullish reversal pattern formed in a downtrend, raising the possibility of an upside bounce in the upcoming sessions. However, the overall trend remains bearish, as the index traded below all key moving averages, and the momentum indicators—RSI (Relative Strength Index at 42.63)—remain in the lower band, while the MACD (Moving Average Convergence Divergence) stays below the zero line.

sunil Kumar matkar analysi-👈

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Levels For The NiftyBank (49,835)

Resistance based on pivot points: 50,151, 50,354, and 50,681

Support based on pivot points: 49,497, 49,294, and 48,967

Resistance based on Fibonacci retracement: 50,455, 51,110

Support based on Fibonacci retracement: 49,276, 47,873

The Bank Nifty formed a bearish candlestick pattern with a sizeable lower shadow on the daily timeframe and sustained below all key moving averages, indicating weakness. The index fell by 0.73% and traded near the lower end of the Bollinger Band, but still held above the August low (49,650) on a closing basis. The momentum indicators RSI and MACD maintained a negative bias, signaling further weakness. Additionally, the index remained below the 50% Fibonacci retracement level (from the June low to the record high seen in September 2024), which also indicates a negative trend.

---sunil Kumar matkar analysis---

SENSEX

Max call OI: 80,000
Max put OI: 76,000
(Expiry: 14 Jan)

The SENSEX also started Wednesday's session on a negative note and recouped the intraday losses from the crucial support zone of 77,800. The index rallied over 600 points from the day's low and formed a bullish hammer candlestick pattern on the daily chart.

The index's technical structure remains range-bound, with immediate support at ₹77,800, corresponding to the low of the December 20 candle. A close below this level could extend weakness toward the ₹76,000 zone. Conversely, a sustained close above ₹80,000 would indicate strength and signal a potential trend reversal.

Open interest data for the January 14 expiry is dispersed, with a significant call base at the 79,000 strike and a put base at the 77,500 strike, establishing these levels as immediate resistance and support zones for the index. Additionally, substantial call and put activity at the 78,000 strike suggests potential consolidation around this level.

FII-DII activity

On January 8, Foreign Institutional Investors (FIIs) sustained their selling spree and sold shares worth ₹3,362 crore. Meanwhile, the Domestic Institutional Investors (DIIs) remained net buyers and bought shares worth ₹2,716 crore. To track the ratio of long and short open positions of FIIs in the index, log in to https://pro.upstox.com/ ➡️F&O➡️FII-DII Activity➡️FII Derivatives.

Asian markets @ 7 am

GIFT NIFTY: 23,722.00 (-0.14%)
Nikkei 225: 39,683.09 (-0.75%)
Hang Seng: 19,294.99 (+0.08%)

U.S. market update

Dow Jones: 42,635 (▲0.2%)

S&P 500: 5,918 (▲0.1%)

Nasdaq Composite: 19,478 (▼0.0%)

U.S. indices closed Wednesday's choppy session on a mixed note as investors reacted to reports that President-elect Donald Trump is considering declaring a national economic emergency to facilitate new tariffs.

Meanwhile, minutes from the U.S. Federal Reserve's December meeting highlighted plans for a gradual pace of rate cuts in 2025. Fed officials indicated that inflation is expected to continue trending toward the 2% target range. However, they cautioned that the process may take longer than anticipated due to potential changes in trade and immigration policies.

-----------------source: upstock&NSE-------------

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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 9, 2025

09/01/25, FinancialMarket REPORT

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