..... . VALI disclosures . .....: 10/02/25, FinancialMarket REPORT

Friday, January 10, 2025

10/02/25, FinancialMarket REPORT

NIFTY50

January Futures: 23,648 (▼0.4%)
Open interest: 5,45,648 (▲5.5%)

The NIFTY50 index remained under pressure on the weekly expiry of its options contracts and ended the day in red. The index failed to close above 8 January's high, invalidating the hammer candlestick pattern formed on daily chart.

As per the weekly chart, the index is giving early indication of the formation of bearish candle. A close below previous week's low and 50 weekly exponential moving average (EMA) will signal weakness. However, if the index protects crucial support zone of 23,500 and 23,300 on closing basis, the trend may remain range-bound.

The open interest data for the 16 January expiry provides key insights. A significant call base was sustained at the 24,000 strike, suggesting that market participants anticipate resistance around this level. Conversely, the put base has been established at 23,500, albeit with relatively lower volume, indicating a less robust support zone.

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👉The Nifty 50 remained under pressure for another session, falling by seven-tenths of a percent on January 9, but managed to take support at 23,500, which coincides with an upward-sloping support trendline. Overall, the trend remains in favour of the bears, with momentum indicators in negative territory and the index trading below all key moving averages. According to experts, if the index fails to defend the 23,500 level in the upcoming sessions, a fall toward 23,263 (the November low) can't be ruled out. However, if it sustains above 23,500, it could open the door for a rebound toward the 23,900-24,000 zone, experts said.

Levels For The Nifty50 (23,527)

Resistance based on pivot points: 23,644, 23,688, and 23,759

Support based on pivot points: 23,502, 23,458, and 23,387

The Nifty 50 formed a bearish candlestick pattern on the daily charts, sustaining below the 200-day EMA of 23,700. As a result, the index remains below all key moving averages, with a negative bias in the momentum indicators. The RSI (Relative Strength Index) stands at 39.51 in the lower band, while the MACD (Moving Average Convergence Divergence) remains below the zero line, signaling a weak trend.

Levels For The Nifty Bank (49,504)

Resistance based on pivot points: 49,728, 49,862, and 50,079

Support based on pivot points: 49,294, 49,160, and 48,943

Resistance based on Fibonacci retracement: 50,329, 51,015

Support based on Fibonacci retracement: 49,278, 47,870

The Bank Nifty maintained lower highs for the fifth consecutive session, forming a bearish candlestick pattern with a sizeable lower wick on the daily charts. It is trading near the lower band of the Bollinger Bands, remaining well below all key moving averages. The momentum indicators (RSI and MACD) are also in a negative trend, signaling continued weakness.

------------By Sunil Shankar Matkar -------------👈

SENSEX

Max call OI: 80,000
Max put OI: 75,500
(Expiry: 14 Jan)

The SENSEX also ended the Thursday's session near day's low, invalidating the hammer candlestick formed on 8 January. The index also surrendered crcuial support of 200 EMA on the daily chart, indicating weakness during upcoming sessions.

The daily chart reveals that the index invalidated the hammer candlestick pattern and lost the critical support level of 77,800, which corresponds to the low of the December 20 candle, on a closing basis.

While the broader trend remains bearish, traders should focus on the weekly closing. If SENSEX ends the week below 77,500 zone, this will signal weakness. On the flip side, a close below 78,500 will indicate range-bound activity for the upcoming session.

FII-DII activity

The Foreign Institutional Investors (FIIs) remained net sellers for the fifth consecutive day and offloaded shares worth ₹7,170 crore. Conversely, the Domestic Institutional Investors (DIIs) remained net buyers and purchased shares worth ₹7,639 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.

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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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Friday, January 10, 2025

10/02/25, FinancialMarket REPORT

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