Stockology is a weekly column by futurologist Mahesh Gowande. He is the Founder and Director of Ayan Analytics, which has developed ZodiacAnalyst, a research software with time and price charting tools.
Review of last week
It was a positive week with the daily candles displaying a bottom-sealing pattern. A large number of stocks are showing signs of this technical pattern, which will not easily break unless there is a knee-jerk reaction triggered by the election results.
Last week we had said that the bottoming-out process would begin, and a number of stock charts have confirmed this. As expected, banks performed well, but the Adani group hurt select funds and individuals significantly. We believe staying away from controversy is the best policy.
Technical analysis
We expected a rebound from the week's lows, and on Friday, short-covering — or perhaps genuine buying — lifted the market sentiment. Thus, breaching the lows of 21/11 will be difficult for a few weeks. Strong resistance will be encountered around 24,500.
Above 24,500, reducing leveraged and loss-making positions is highly recommended. Above 24,800, consider reducing exposure to equities as an asset class. The current market valuation is expensive, with the next six quarters broadly priced in. This is not being sceptical, but cautious — capital protection should be the top priority.
We frequently mention confirmed tops and bottoms, leading to some queries. The answer lies in Elliott wave counts, which simplify and clarify this for investors and traders. However, don’t aim for perfection in applying it. Even Elliott himself often got it wrong, so use it as a tool rather than something absolute.
TimeMap
The Adani group, regularly embroiled in controversy, saw a significant loss in market cap on Thursday. The fall triggered margin calls, putting many bankers under pressure. With the Sun entering the Anuradha nakshatra, seasoned players are expected to build new positions for the next 18 months. This is an excellent time for speculative bets, particularly in mid and smallcaps.
The planetary aspects for the week are limited, but some alignments are interesting. The sun’s 120-degree aspect with Mars on the 27th is highly positive. The upcoming week’s TimeMap indicates a bottoming-out process. Election results may cause volatility during the first two days, but markets should eventually see an uptick.
New companies and sectors emerge in the wake of major bull trends, while some existing ones go into hibernation. Metals, specialty chemicals, and banks are likely to see positivity. Going forward, young, tech-driven companies will dominate, as seen with Zomato surpassing D-Mart in market size and entering the Nifty.
Last week, we expected Thursday to be positive, but the Adani news altered the market mood. However, the markets slowly recovered after the initial panic, with many stocks closing in the positive. The following day was bullish as anticipated.
Daily market insights: November 25: Monday: K.10: Uttara: good till 12 noon
The interesting time of the day is from 11:35 to 11:55 am, when divergence indicators will yield the best results on the hourly charts. Day traders are advised to buy and sell as the day’s outlook is bullish. Towards the end, many stocks in the derivatives segment are expected to close in the positive. STBT (sell today, buy tomorrow) is suggested.
November 26: Tuesday: K.11: Hasta: an auspicious day
While the tithi is auspicious, the market is expected to be bearish. The nakshatra suggests that patience will pay off. Use lagging and lazy indicators; avoid aggressive trades. Focus on slow and steady strategies, be selective with purchases and act on your terms. Low-beta counters, MNCs, pharma, and PSU banks are expected to perform well. BTST (buy today, sell tomorrow) is recommended.
November 27: Wednesday: K.12: Chitra: a bullish day
Proactive actions will yield better results. Prepare trade setups before the market opens, and stick to your plan during execution. The Chitra gap will play a crucial role, with divergence indicators showing extreme zones. Mars will dominate the day, highlighting real estate and new-age companies.
November 28: Thursday: K.13: Swati: an investment-focussed day
Expect a volatile trading session. Post-lunch, sudden panic sell-off in select counters due to external news cannot be ruled out. Reliance is expected to respond positively to tithi 13, making it a good short-term buy as per the TimeMap. Oil and gas, as well as private banks, are likely to yield the best results. Increase speculative positions in natural resource companies, especially metals.
November 29: Friday: K.14: Vishakha: a bullish day
A flat or lower opening is expected. Most day traders may lose money by attempting contrarian strategies before confirmation signals. Delayed participation or using shorter time frames will yield better results.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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