Tensions Rise. Markets Stall. What's Next?

Grab your chai ☕︎! Let's dive into the weekly buzz of the Indian stock market.

Hello🙋‍♂️!

We are here with the 76th edition of ‘Sharpe Insights’.

This week, we saw wild market swings on both sides. So, we have a lot to talk about this week. But before that, we have two big announcements for you.

First, we are hosting a masterclass on 3rd May on ‘how to select the right mutual funds and create a solid MF portfolio.’

In this masterclass, we will cover how to analyse mutual funds using the right data points, how to compare them and how to create a solid portfolio with adequate diversification. So, if you invest in MFs, you should not miss this. Click the button below and turn on the notification so you don’t miss it!

Second, our ‘Stock & Sector Screeners Focus Club’ is now live on Frontpage. Here, traders and investors are diving deep into stock ideas, sector trends, and smart strategies.

More than 100 traders and investors are already engaging in the discussion and sharing some great screens. So, what are you waiting for?

Now, let’s look at the important data points of the week.

Global Macro Factors🌍

Even though geopolitical tensions are at an all-time high, global macro factors were positive this week. Crude was down again by a solid 3.35% this week. It is now trading below the $67 mark. Gold pulled back by 1.69% after the one-sided rally in the last few months. It is now trading near the $3300 mark and looking overstretched.

The dollar index was flat this week. The rupee was marginally down as USD INR rose by 0.14% during the week. It is trading at 85.32. The US 10-year Treasury Yield was flat. It is now at 4.25% vs 4.33% last week.

The S&P 500 rallied by a solid 4.26%. It is now trading below the 5500 level! India's forex reserves jump to six-month high of $686.2 billion during the week ended April 18, the data from the Reserve Bank of India showed.

Market Performance📈

This week, we saw a consolidation with high volatility in the market after the strong bounceback of last week. All the broader market indices ended the week in green. The Q4 results season is going strong, but the results so far are not very strong. Median profit growth is in the lower single digits.

The Nifty 50 was up by a decent 0.79%. The Nifty 100 and Nifty 500 were also up by 0.67% and 0.77%, respectively. While the Nifty Smallcap 100 was up by 0.83%, the Nifty Midcap 100 was the top gainer and ended the week with a rise of 1.73%.

The Nifty 50 was up by a decent 0.79%. The Nifty 100 and Nifty 500 were also up by 0.67% and 0.77%, respectively. While the Nifty Smallcap 100 was up by 0.83%, the Nifty Midcap 100 was the top gainer and ended the week with a rise of 1.73%.

Sector Analysis📊

This week, we had a mixed bag at the sectoral level. Most of the indices ended the week in the flat to negative territory.

There was a strong show by the IT sector as some of the big names reported good Q4 numbers, and the sector was oversold in the near term. Auto, Pharma and Realty also did well as they all moved by more than 1% during the week.

Now, let’s discuss market breadth. We gauge it by looking at stocks trading above their 50-day EMA. The number continued its upward journey this week. It is at 79% vs 67% last week. So, there was a marginal gain this week. We believe that anything between 40 and 70% is a good range. So with this sharp one-sided recovery, we are looking a bit overbought in the near term, and we are seeing the same exhaustion on the chart (We saw it on Friday). So if you are a trader, then trade with a tight stop loss and lock in the gains if the market decides to go down.

Sectors To Watch

First things first! We have made some awesome updates to our RRG chart. Here is a quick video where we explain them. Many premium members are using RRG charts on sharpely. It helps you to find strong sectors and stocks based on relative strength and momentum. You can check it out here. Now, let’s see what it says this week.

Similar to last week, we can see that many sectors are between the lagging and improving quadrants (red and purple ones). But there are some interesting names on the strong side of the chart. Keep an eye on Banking and Finance, Metal, PSUs and Oil and Gas space. They are showing high relative momentum at the moment.

On the RRG chart, you can also compare stocks from these sectors by just selecting the index to find the strong names! Finding the right sectors and stocks can’t be easier than this! So check this tool out now!

That’s it for this week, folks. See you next Sunday!