Markets at All-Time High

June Issue 1

The equity markets enjoyed the upwards momentum in the second week of June. They continued to hit all-time highs this week, as the Covid-19 cases have declined significantly over the past few weeks and add to the globally uplifted sentiments towards the markets. On Friday, May 11th the markets ended the week in green where Nifty was at 15799.35 (+0.82%) and Sensex was at 52474.76 (+0.72%).

Nifty IT had a great week and was at 28217.5 (+4.52%) by the end of the week. The two leading players in the IT sector TCS and Infosys signed new deals and were up 4% and 4.5%.

India VIX’s volatility index based on Nifty was at 14.10 down 7.78% amid the rising markets and several Indices touching all-time high.

GST Collection for the 8th time in a row crossed the 1 lakh crore mark as the GST collection stood at 1,02,709 crores. The revenues from May 2021 were 65% higher compared to May 2020.

PSE (Public Sector Enterprises) continues to be a top-performing sector as it rode the momentum that it gained in the past few weeks. Nifty PSE stood at 3734.4 (+3.03%) by the end of the week.

Top Gainers and Losers

Spotlight

This week was all IT as we saw the Nifty IT was up over 4% and there are two reasons for its TCS (Tata Consultancy Service) and Infosys. TCS said it will expand its strategic partnership with Virgin Atlantic, which will be a new chapter for growth in their 17-year long relationship. This news sent the stock soaring 4%, uplifting the sentiments in the IT sector. On the other hand, Infosys jumped almost 4.5% after announcing its collaboration with Archrok, Inc. to integrate mobile tools and digital technology for their field technicians and ultimately making the IT sector the best performer of the week.

Earnings Report

Dividend Calendar

Outlook for the Next week

The markets look set to enjoy the upward momentum in the coming week as well, we are also waiting the WPI (Wholesale Price Index) and CPI (Consumer Price Index) numbers which will be released on Monday the 14th of May. We expect that this economic data will positively impact the markets and with the Covid-19 cases reducing every day and the state governments easing restrictions around the country we believe this will help the markets rise. However, since the markets and several stocks are seeing all-time high, investors should remain cautious as there can be profit bookings as stocks hit upper circuits.

Good to know

What is Average Down Strategy?

This strategy helps investors to reduce their losses when the price of their stock is falling. This involves the additional injection of capital on top of your initial investment; by doing this, investors bring down the average cost of their investment. It is a long-term holding strategy, where you expect the price of your stock to go up to magnify your gains, although there is a possibility that the price of your stock continues to go down and you hold a large position is a losing stock. One should use this strategy while holding blue-chip stocks for the long term.

For example: – You invest 10,000 into UPL at 1000 and get 10 shares, suddenly the price of the UPL shares falls to 500, and you decide to use Average Down Strategy and invest another 5000 to buy 10 more shares at 500 in hopes of the stock bouncing back. Now your average cost comes down to 750 leave you with a loss of 250.

 From this point on, if your stock price goes up, you make more money and reduce or even eliminate your loss and turn it into profit or hold a stock that will continue to go down in value and extend your losses.

Chaitanya Chaman
Chaitanya is currently a research intern with Econfinity. He is a finance and investment enthusiast with two years of experience in investment management.