Stockology: IT, auto, & midcaps showing positive signs; markets to remain optimistic

The 24,750 level has now become a confirmed bottom, and breaking it would trigger major unwinding of positions.

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.

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Review

The biggest surprise came on Thursday when the markets hit an all-time high, which even seasoned players did not anticipate. This triggered a renewed uptrend across the board, pushing bears  onto the backfoot. The metals sector showed significant aggression and confidence, mainly driven by positive numbers from China  offering  hope for revival.

The market is shifting gears daily and churning portfolios. As mentioned last week, corrective action at any point cannot be ruled out.

Technical analysis

The technology and metals sectors are showing a lot of strength, while the banking sector remains stable. High-momentum stocks of the last three to six months have experienced significant correction. Day by day, the movement in mid, small, and microcap stocks is becoming more aggressive. Interestingly, participants are making money, while those waiting for corrections are missing out on the action and becoming restless, and are likely to enter the market at unfavourable price points. Technically, the outlook remains similar to last week. The major target points on the upside are 25,590 and 25,810, with an ambitious short-term target of 26,489.

Divergence indicators and the time map are showing similar signs, and it appears that a breakout bull-trap could form on the charts in the coming days, before a major corrective movement begins.

The 24,750 level has now become a confirmed bottom, and breaking it would trigger major unwinding of positions.

Time map

There’s no need to panic, as the markets are expected to close positively this week. So wait for a bounce before exiting.

Last week we mentioned that markets would close positively, but did not expect them to reach a new high. Interestingly, very few investors saw a new high in their portfolios. There is a visible divergence — the index is at a new high, but portfolios are underperforming and nowhere near their highs, which is a warning. Reshuffling the portfolio is advised.

The markets will remain optimistic, and the solar date trade indicates a long position in the Nifty. IT, auto, and midcap stocks are showing positive signals, and aggressive investment in small and midcap tech companies is highly recommended. However, the defence sector and some PSU stocks are looking weak, and further correction cannot be ruled out. Caution is advised in real estate, because while some stocks are in an extended rally,  a corrective move could begin any moment. On the other hand, textile stocks need a revised outlook. The engineering sector is expected to become the darling of 2025.

Small and midcap technology companies will also become takeover targets. The 18th of September seems to be an interestingly volatile day of the week.

September 16, 2024: Monday: S.13: Dhanistha: volatile

A higher opening is expected. Index-heavy and high-beta private banks will dominate the spotlight. Greed will drive many day traders to take aggressive positions before 11 am, but the time map suggests waiting until after 11:55 am for better rewards. Around 2:20 pm, look for a sell signal in index stocks, as significant profits can be made from sell trades. BTST (buy today, sell tomorrow) is highly recommended.

September 17, 2024: Tuesday: S.14 - 11.45 am: purnima: Shatataraka: bullish until 12

A higher opening of indices and follow-up buying will trap day traders. A full moon after 12 can make people hyperactive, and greed will boost confidence, leading many to overtrade. Avoid relying on technical signals, and stick to one or two confirmation trades. Both sell and buy trades will be rewarding. STBT (sell today, buy tomorrow) is indicated. Natural resources, FMCG, and fundamentally sound stocks are recommended.

September 18, 2024: Wednesday: purnima/K1: P. Bhadrapada: bad day

A bearish mindset and nervous sentiment are expected, and participants will feel pressured. A steep fall cannot be ruled out. Multiple aspects of the moon and other planets will make it difficult to make decisions, and most participants will be confused, leading to errors in trades. Ideally, avoid new investments and positions. Restrict intra-day jobbing to a few trades, close existing positions, and only then initiate new ones. STBT is highly recommended.

September 19, 2024: Thursday: K.2: Revati: auspicious day

A gap-down opening and significant negative movement cannot be ruled out. Lack of market news and misleading information can trap many aggressive traders. With the moon in a bad phase, people may tend to panic and make irrational decisions, often resulting in further losses. A negative day is expected, but after 2:45 pm, aggressive long rollover is suggested. BTST is highly recommended.
September 20, 2024: Friday: K.3: Ashwini: bullish day

The tithi is bullish by nature and tends to bring directional and market-wide moves. The nakshatra is favourable for investments, especially in the tech sector. Ideally, if technology stocks are under pressure, this presents the best opportunity to invest. In case of a gap-up opening, adopt a buy-and-sell strategy throughout the day, and continue holding profitable positions.

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.