Weekly Analysis – 12th April 2020

Note : This is not a recommendation and I am not a registered analyst, these are just data points and an assessment of the positives and negatives from a longer term point of view.

Nifty Weekly

**Some charts below use moving averages. Now, with all the destruction - the prices are far below these averages, so we face 2 choices:

A)      Either we wait for price to catch up to the MA’s – then we might miss out on some solid gains.

B)     Either the MA’s catch up to price – then we get saved from further losses or a frustrating range bound move.

Chart 1. Strategy 1 & 2 based on Nifty TRI – Both are in exit mode and I am in liquid-bees. Bond strategy is still in buy mode and I am holding a 10Y bond fund. Green line is up means buy mode and green line at 0 means exit mode. Portfolio return since 4^th November is -15.15% and current drawdown is 17.37% compared to Nifty ETF return of -23.83% with a current drawdown of 26.65%.

Chart 2 Nifty total returns/10 year Bond index ratio is BELOW its 40-week MA & momentum has shifted to Bonds, both indicating longer term outperformance of Bonds vs Nifty.

Chart 3 Longer term intermarket strength as per the RS matrix is in FMCG, IT & Pharma. With Realty and Media at the bottom.

Chart 4 NONE of the broader indices is above their respective 40-week MA, and only 1 of the sector indices is above its respective 40-week MA. Forward returns (3 to 6 months out) on Nifty have generally been negative to flattish at these readings.

Chart 5 Avg. & Median distance of all sectors from their 52-week closing high is at -31% & -33%.