In our weekly stock market preview, we discussed tactics to study data and event analysis for the upcoming week. In this post, we will discuss for the upcoming week
- Data and event analysis
- What will be the trend
- Important things to remember
- Understanding market behaviour
It is important to understand market behaviour before stock market investing. If you do not understand stock market behaviour – you cannot trade accurately. We’re delighted to Mr. Mainish Taneja (Sr. Research Analyst) to share the stock market trading tactics for traders to trade with accuracy. You can view full Stock Market Youtube Video here
Market Behaviour and its Connection With Last Week
In the past 6 months, the market showed positive sentiments but the data was constantly negative. Understanding the risk and rewards in each trade, short-term bearish and long-term bullish, the trading strategy suggest for the past 6 months.
On 8th September in our weekly episode, IFMC predicted the right positive market movement after 6 months of continuous downfall since April 2019.
We saw an unexpected positive trend during the second week of September 2019. This was the first time in the last 6 months that both GDP and consumption were positive. Nothing this data IFMC was the first to predict the budding of the bullish market again, provided these data remain positive.
Later in the week, we have seen reports on positive market trends by many renowned investors like Rakesh Jhunjunwala and several renowned media channels also said that the market has bottomed out around these levels.
On Friday 20th Sep 19, the Nifty50 surged 528 points, the biggest single-day stride in 10 years. We should not view this as the biggest single-day rally but we must understand why this has happened and what would be the next move of the market. So let’s understand this Market Behaviour in a simple way.
Stock Market is driven by various factors and we all have heard the word Cartel in stock market. We have Bull Cartel and Bear Cartel. This week the market was very weak and just it escalated a single new of attack on oil refineries in Saudi Arabia and market dipped down to 400 points. The 400 points dip a great dip compared to the news which did not have that much weight on the global cues. Because of panic, the buyers convert to sellers and sellers became double sellers creating a huge gap in the market and once it completes on Thursday; the market bounced back on Friday with thunderous applause.
An ace trader understands the weight of every single news and takes appropriate action under the news. In our course MADE also we have tried to explain how to analyze each news and use the information to predict the market movement and understand in depth the market behaviour.
We saw A similar experience in the Movie ‘Bazaar’ (2018) starring actor Saif Ali Khan. The movie based on the plugging dips and giddy highs of the stock market. False ups fooled people and false down by bear and bull cartel. These cartels make big money, but it is very difficult to find this cartel. So Ace investor and traders do not fall in trap of these cartels.
Last week we predicted a short term bullish position at NIFTY50 Support level 1 of 10986 and support Level 2 of 10936. But it breached both levels and got its support at major level of 10700. After that, it rose almost 525 points by EOD proving our predictions on short-term bullishness.
We calculated these levels using the Uni-Directional Trade Strategy (UDTS) and Market Data and Event Analysis (M.A.D.E) tells how to weigh the news and data.
Weekly Stock Market Preview
Last week, Saudi Arabia suffered the single-biggest blow to its oil infrastructure in the country’s history when critical processing facilities were attacked. This impacted Indian Stock market to fall at the level of 10700 at 400 points. This was a major fall due in comparison to a change in the foreign stock market.
NIFTY50 advanced 569.40 points on Friday to 11,274.20, the biggest since 10 years. Recovering from a loss of 3.4 percent for the week to the end on Friday 20 September, gaining 2 percent.
A day earlier, both the indices were low, as investors fretted over slowing down of economic growth. The market on Monday was predicted to sustain a bullish level. While the market opened at the lower level due to Crude Oil price gain. Thus, the NIFTY50 market closed at a lower support level of 10986.
On Tuesday, the market breached both support levels of 10986 and 10936 giving no chance to buy above support levels. On Thursday 19 September market touched last support of 10700 and on Friday the market took a major moment with NIFTY snapped at 524 points – creating history and closed at 11274 near to its last resistance on 11300.
Investors taking a bullish position at the level of 10986 to 10936 were profitable. The market created hype among investors and traders. An impatient jump in the market with little capital and no investing plan result in a lack of profits. Once the market turns down such investors start to lose they panic and leave with a loss.
Being impatient by jumping in or closing out at every small move against your position will always result in net losses. Waiting patiently for the market price to reach some level which you think will result in an improvement in the price due to market structure and other factors will usually result in a profit.
Now, read how the market data and event from last week, will impact the domestic and international stock market levels.
Last Week Prediction Preview
- The NIFTY50 closed at 11274 points with a surge of 280 points.
- Market experience pullback in price with bullish in the short term.
- The market remained in the given levels of 10700-11300
Now, let’s see how to prepare for the next week using good and bad market news.
Domestic Positive Market Factors
- Bullish on seeds on good July GDP and consumption data
- Finance Minister announces a tax cut rate to boost corporate earnings from 30% to 22%
- The effective tax rate for companies to be 25.7% including surcharge and CESS. Such companies not required to pay MAT
- Enhance surcharge rate on capital gains arising on quality share in a company abolished.
- Listed companies exempt from buyback tax
- GST Council abolish compensation cess rate for vehicles at the rate of 15%
- Companies not wanting to opt for option 1 or 2 can continue within the existing tax regime. Post expiry of the current regime they can choose one of the above and will have to stick to the same.
Global Positive Market Factors
- Geopolitical tensions limit gains
- Crude Oil price fall by 1%
- China taking strong initiatives to improve the economy like cut in the low loan rate
- FED rate cut but doubtful on future stimulus
Domestic Negative Market Factors
Big boosters given to economy will bring a loss of 1.5 trillion to govt.
Indian government is constantly taking positive actions to rise the market with systematic changes. Various reforms and initiatives have been taken to stabilize the market for the long-term. Learning market sentiments is equally important to make profits.
Forthcoming Events
There is no major news expected to announce for the upcoming week. While in the global market, the US will release Consumer Confidence data on Tuesday. On Wednesday new home sales and crude inventory data will release.
On Thursday, the USA will release GDP data and Core durable goods data.
Now, let’s see how will the NIFTY50 expects to behave next week.
The monthly support level 2 for the market will remain at 10960. A whole weekly NIFTY50 support level will be 10994 and daily support level is 10746.
NIFTY50 has crossed both long-term and short term bullish. Long-term traders should make bull position only if Nifty sustains above 11060 level.
Conclusion
- Long term market will remain bullish at above 11060
- Level of the market will sustain between the range of 10700 to 11700
- Buyers should remain within a bullish market with range of 11400 to 10960 support level.
