IndiaVIX says No Election Fear. Smallcaps Strength but Selective, Nifty IT Gone & Banks interesting.

1) INDIA VIX – No Fear of Elections

IndiaVIX – Generally going into Elections, Budget and known events the Option Pricing tends to factor in the risk with VIX going higher.
Look at the spike and subsequent drop in VIX post 2014 and 2019 elections.
This time around looks like Market has no Fear of Elections.

2) Nifty50 – Trend up

3) BankNifty – Contra works better now.

For more than a decade from 2009 to 2020 – Banks were always the leaders in any trend. That seems to have changed post Covid.
Now its more a Contra Bet. Also with HDFC, Kotak showing no strength it becomes more so.
Accumulate the Dips.
Remember our June 2022 report when everyone had given up and FIIs were selling.
Check the old Report https://nooreshtech.co.in/2022/06/future-of-nifty50-banking-on-banks-free-detailed-presentation.html
Smaller Private Banks look interesting too.

4) Nifty IT – Back to Old ways

NIFTY IT - The regime changed in 2022. The Covid Re-Rating over. Now back to its decade old stance of not being an outperformer majorly
to Nifty.
Now one needs to be Stock Specific. No More a Sectoral Bet. Divergent moves to be seen across stocks.

5) BSE Cap GOods, Industrials, Manufacturing, PSE, Railways – Now thats called a Trend.

All the Sectoral charts look very similar. For example the BSE Cap Goods Index

We came out with a Note – The Most Hated Promoter is Changing Trends in October 2021 ( The Government/PSU Stocks ).

Had initiated Thematic Bet on it in Technical Traders Club

Now it looks like the Outperformance should shift to inline with Markets.

Time to look at shifting out gradually.

6) BSE Smallcap – Amazing Strength and Recoveries.

The Strength and Recovery in Smallcaps has been the Character of this Bull Market.
For now the bottom was made closer to a Major Swing Low.
Some Resistance seen at the preivous tops.
The tough question is whether it will consolidate in this range of say 40k-47k for some more time or breakout soon.
Time to react post the breakout.

Conclusion

The momentum of 2023-2024 has taken a pause. Everything going up has stopped for a while.
Now one needs to be selective and work harder for outperformance.
Regime changes can be coming in many sectors. One needs to be careful in the outperforming sectors – Defense, Railways, PSE, Manufacturing, Capital Goods.
Banks still look an interesting place for Large Cap Investors. Smaller could be better is a view.
Smallcaps lot of Strength but one has started seeing more selective price action. React on Fresh Breakout.
IndiaVIX suggests there is no Fear of Election Results.
FY24 was an uptrend across most stocks/sectors. Now selective.
Overall trend remains positive but currently in a Consolidation.
Will need to look for leading Sectors and Work Harder.
For example investors who shifted/avoided from IT/Pharma/Digital in 2021-2022 peak and focused on Cap Goods/PSE/Manufacturing/Railways etc have had a super outperformance.
Simply Put – Time to Work harder, Widen your Range of Stocks/Sectors, Look for New Leaders.

Two Products that can help you

In the next post will look at Stock Specific Interesting Charts

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