Weekly Analysis – 17th May 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, the prices are far below these averages, so we face 2 choices:

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

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

Chart 1. Strategy based on Nifty TRI – is in exit mode and I am in liquid-bees. Bond strategy is still in buy mode and I am holding a 10Y bond fund. If Green line in charts below is up means buy mode and green line at 0 means exit mode. Portfolio return since 4^th November (go live) is -13.25% and current drawdown is 15.53% compared to Nifty ETF return of -23.16% with a current drawdown of 26%.

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 is in FMCG, Infra & Pharma. With Realty and Banks 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.

Chart 5 Avg. & Median distance of all sectors from their 52-week closing high is around -29% each.