The short
- Tape: Early bid lifts headline indices; breadth flips positive and stays constructive on dips.
- FX: USD/INR near 88; a gentler dollar path supports risk and import-heavy sectors.
- Leaders: Banks, capital goods; Cooling: FMCG pockets; Flip-flop: selective IT and small auto ancillaries.
- Rule: Size single names ≤ 5× 20-day ADTV. Trim if the stock underperforms Nifty by ~6% over 4 weeks or net earnings revisions turn negative.
Translation: let trends prove themselves. Your first job is defense.
Levels & breadth (snapshot)
| Index | Status | Breadth cue | What to watch |
|---|---|---|---|
| Nifty 50 | Reclaims 26,000 intraday | A/D turns >1.5× on upticks | Close above last week’s high = risk-on confirmation |
| Bank Nifty | Outperforms | PSU + Pvt both green | CASA commentary & deposit beta pressure in Q2 wrap-ups |
| Smallcap 100 | Choppy channel | Mixed; leaders narrow | Day-2 liquidity; avoid FOMO candles with thin floats |
| USD/INR | Hovering ~88 | Lower vol helps | Break below recent range = tailwind for rate-sensitives |
Breadth tip Two sessions of rising A/D with falling intraday vol > one big green candle. Participation beats pop.
Rotation tells
Banks & Financials
Credit growth stable; asset quality benign. Private banks with better CASA mixes and measured opex look set to compound. PSU banks ride the capex cycle but watch for sharp beta to rates.
- Prefer lenders with wholesale funding < 20% and OCF/EBITDA > 0.8.
- Trim if NIM guide tightens and fee lines don’t offset.
Capital Goods
Orderbooks are thick; execution cadence matters more than headline awards. Input costs are drifting but manageable.
- Favor diversified EPC + products vs single-client exposure.
- Watch order-to-revenue conversion and working-capital turns.
IT & Services
Deal ramps remain lumpy. Cost-takeout and modernization beats broad “AI” headlines for now.
- Stick to names printing large-deal TCV with margin defense.
- Avoid paying up without delivery proof in the next two quarters.
Autos & Discretionary
Festive builds help PVs; 2W recovery uneven. Inventories need monitoring more than social buzz.
- Dealer weeks > 6 for two checks in a row = cut risk.
- Prefer cleaner balance sheets over hype-cycle launches.
Flows & microstructure
Domestic
Steady SIPs keep a floor under quality largecaps. Use this cushion, don’t lean on it.
Foreign
Risk appetite improves when USD/INR chills. Financials/industrial flows perk up first.
Liquidity
Intraday slippage > 35 bps at your intended size? Scale down or stagger orders.
Scenario ladder (directional)
| Path | Trigger | Likely tape | Play |
|---|---|---|---|
| Base | Nifty holds > 26k; USD/INR calm | Slow grind, dips bought | OW Banks/Cap-goods; hold winners, rotate within leaders |
| Upside | Close above last week’s high on strong breadth | Momentum extends | Add to leaders on pullbacks; introduce selective midcaps with earnings support |
| Downside | USD/INR spikes; breadth rolls over | Fade rallies | Raise cash, cut high-beta smallcaps, stick to liquid defensives |
Positioning checklist
- Halve size if free float < 18% or day-2 volume collapses after an event pop.
- Favor names with 3-month net upgrades and visible catalysts in the next 45–60 days.
- Respect your stop framework: trailing ATR or the −6% vs Nifty/20d rule—pick one and stay loyal.
Three simple charts to set up (DIY)
- 13-week sector RS vs Nifty + breadth overlay → confirms if leadership is broadening.
- Smallcap/Nifty ratio with drawdown bands → tag risk cycles; don’t add into extremes.
- USD/INR vs Bank Nifty (rolling 30d) → sensitivity check for rate-sensitives.
Don’t overfit. You want signals that work in most regimes, not every tick.