Harsh Singh

Domestic stock market

On May 24, the Indian benchmark indices hit new highs during
range-bound trading, with Nifty breaking 23,000 points for the first
time. However, the indices could not hold onto the highs and
closed with modest gains. The Sensex fell by 7.65 points, or 0.01%,
to 75,410.39 points, and the Nifty declined by 10.55 points, or
0.05%, to 22,957.10 points. Among sectors, oil & gas, capital
goods, telecom, and media rose by 0.5-2%, while FMCG,
healthcare, IT, metals, and real estate fell by around 0.5%.

The BSE mid-cap index rose by 0.2%, while the small-cap index
fell by 0.2%. For the week, both the BSE Sensex and Nifty50
indices increased by 2%.
NIFTY 50

The NIFTY index exhibits an overall upward trend with fluctuations. Despite
experiencing several significant swings, the general trend remains positive.
Recent price movements demonstrate strong upward momentum, with prices
breaking through multiple key resistance levels.
SENSEX

The SENSEX index, after reaching a historic high, did not continue its
upward momentum from the previous day. Influenced by the U.S. stock
market's decline yesterday, today's market movement was more volatile.
Foreign stock markets
On Thursday, U.S. stocks saw the Nasdaq and S&P 500 indices
open higher and hit all-time intraday highs, but both later declined.

The Dow Jones Industrial Average fell by 605.78 points, or 1.53%,

to 39,065.26, marking its worst single-day performance since
March 2023. The Nasdaq dropped by 65.51 points, or 0.39%, to
16,736.03, and the S&P 500 decreased by 39.17 points, or 0.74%,
to 5,267.84. Despite Nvidia reaching a historic high above $1,000,
it couldn't prevent the overall market decline.

The market is concerned that the Federal Reserve may not cut
interest rates soon.
 Dow Jones Industrial Average

The Dow Jones Index has broken through both its upward trendline and a key support level,
indicating a clear bearish signal. Investors need to closely monitor the support level around
39,000 points and the long-term moving average at 38,795 points. If the price fails to
s t a b i l i z e n e a r t h e s e s u p p o r t l e v e l s , f u r t h e r d e c l i n e s m a y o c c u r.
 S&P 500

The current S&P 500 index has broken both its upward trendline and short-term support
level, indicating a bearish signal. It is important to monitor the support level around 5260
points and the long-term moving average at 5152 points. While a short-term rebound may
o c c u r, m o r e c o n f i r m a t i o n s i g n a l s a r e n e e d e d t o i n d i c a t e a s h i f t i n t h e o v e r a l l t r e n d .
 Nasdaq

The current Nasdaq index has broken both its upward trendline and key support
level, indicating a clear bearish signal. Investors should closely monitor the
support level around 18,376 points and the long-term moving average at 17,946
points. If the price fails to stabilize near these support levels, further declines
may be expected.
Primary Account
Primary accounts typically refer to accounts used by institutional
investors and large financial institutions for participating in initial
public offerings (IPOs) and other primary market transactions.
These accounts allow holders to purchase shares directly from
issuing companies, bypassing the secondary market, which is the
public trading market. The primary market is where new securities
are first issued and sold, including stocks and bonds. Investors
holding primary accounts usually purchase new shares at a
discounted issue price, sometimes with additional discounts or
preferential purchase rights. The main advantage of such accounts
is direct involvement in the IPO process, often obtaining shares at
more favorable prices than those available in the secondary
market.
Primary Account
Currently, stock issuance in the market employs an underwriting system. Underwriters play a crucial role in
stock issuance, with their main responsibilities and functions including:

Risk assessment and pricing: Underwriters conduct detailed financial and commercial evaluations of
companies seeking to list. Based on these evaluations, they determine the initial offering price,
considering market conditions, the company's financial status, industry context, and economic environment.

Marketing and distribution: Underwriters develop and execute marketing strategies for the stock. This
includes pitching the company and its stock to potential investors and organizing roadshows to attract
investor interest and ultimately sell the new stock.

Capital assurance: Underwriters typically sign underwriting agreements with issuing companies, promising
to purchase any unsold shares in the public market. This form of underwriting, known as "firm
commitment," provides the company with funding assurance, ensuring they obtain the necessary capital as
planned.

Legal and compliance: Underwriters ensure that the stock issuance process complies with relevant laws
and regulations. This involves preparing and submitting necessary legal documents, such as the
prospectus, to ensure all information is accurate and transparently disclosed.

Market stabilization operations: In the initial period following the stock issuance, underwriters may engage
in market stabilization operations by buying and selling stock to maintain market price stability and prevent
extreme price volatility.
Primary Account
More share allocation:
Underwriters usually establish special
relationships with primary accounts,
allowing these accounts to receive
more shares than ordinary investors
during a new stock issuance.

Subscription price discounts:

Primary accounts not only potentially
receive more shares but may also
obtain discounts on the subscription
price. These discounts are provided as
incentives by underwriters to attract
large investors to participate in the
issuance, helping to quickly absorb and
distribute the stock.
Primary Account
Primary accounts in the financial markets often have execution priority
due to their large funds and frequent trading, forming close relationships
with exchanges or brokers. Key factors for this priority include:

Trade Speed and Efficiency: Primary accounts usually enjoy faster

execution speeds through Direct Market Access (DMA), bypassing
traditional broker queues.

Better Price Access: They often negotiate better terms and prices with
underwriters or market makers.

High-level Service and Support: They receive dedicated customer service

and financial advisory, ensuring priority in trade execution.

Influence and Market Impact: Their large trades can significantly impact
market prices, indirectly enhancing their priority.
Primary Account
Primary accounts not only
have priority in trade
execution mechanisms but
also in the transmission of
trade orders. This priority is
particularly important during
extreme market conditions,
such as limit-down or limit-
up scenarios.
Primary Account
Support & Resistance
Support and resistance levels represent key points where supply and
demand intersect. In financial markets, prices are driven by excess
supply (downward) and excess demand (upward). As demand
increases, prices rise; as supply increases, prices fall. When supply
and demand are equal, prices move sideways.
Support & Resistance
What is a support level?

A support level is a price level where the demand is strong enough to prevent the price
f r o m d e c l i n i n g f u r t h e r. T h e l o g i c i s t h a t a s t h e p r i c e d r o p s t o w a r d s t h e s u p p o r t l e v e l a n d
b e c o m e s c h e a p e r, b u y e r s a r e m o r e l i k e l y t o b u y, a n d s e l l e r s a r e l e s s w i l l i n g t o s e l l . W h e n
t h e p r i c e r e a c h e s t h e s u p p o r t l e v e l , i t i s b e l i e v e d t h a t d e m a n d w i l l s u r p a s s s u p p l y,
preventing the price from falling below the support level.
Support & Resistance
What is a resistance level?

A r e s i s t a n c e l e v e l i s a p r i c e l e v e l w h e r e s e l l i n g p r e s s u r e i s d e e m e d s u ff i c i e n t t o p r e v e n t
t h e p r i c e f r o m r i s i n g f u r t h e r. T h e l o g i c i s t h a t a s t h e p r i c e a p p r o a c h e s t h e r e s i s t a n c e l e v e l ,
s e l l e r s a r e m o r e i n c l i n e d t o s e l l , a n d b u y e r s a r e l e s s w i l l i n g t o b u y. W h e n t h e p r i c e
reaches the resistance level, it is believed that supply will surpass demand, preventing the
price from breaking above the resistance level.
Support & Resistance
What are support and resistance zones?

Since technical analysis is not an exact science, creating support and resistance zones
can be useful. Each security has its own characteristics, and the analysis should reflect
t h e c o m p l e x i t y o f t h e s e c u r i t y. S o m e t i m e s , p r e c i s e s u p p o r t a n d r e s i s t a n c e l e v e l s a r e b e s t ,
a n d s o m e t i m e s , z o n e s a r e m o r e e ff e c t i v e . G e n e r a l l y, t h e n a r r o w e r t h e r a n g e , t h e m o r e
precise the level.
Support & Resistance
How to Find Support and
Resistance?
Common Support and Resistance
Support and resistance levels can
be found in all chart timeframes,
Highs and Lows in Charts
s u c h a s d a i l y, w e e k l y, a n d m o n t h l y
charts. The longer the timeframe,
Trend Lines
the more apparent the support or
r e s i s t a n c e l e v e l b e c o m e s . To
Round Numbers
determine support or resistance,
review the chart to find where the
Indicators
price clearly paused or reversed
during a decline or rise. Then,
observe whether the price stops or
reverses when approaching that
level again.
Price Patterns
In charts, the highs and lows of candlesticks are crucial
because they help analysts identify support and
resistance levels.
Support & Resistance
Trendlines play a vital role
in technical analysis. They
not only help traders
identify the direction of
price movements but also
act as support or resistance
levels. This is because
trendlines are drawn based
on historical price data,
reflecting the market's
collective expectations.
Support & Resistance
Round number price points often act as psychological
support or resistance levels in stock trading. This is because
traders and investors tend to place a large number of buy or
sell orders at these round numbers, making them key levels
in the market. These round number price points are known as
"psychological levels" because they are easy to remember
and often serve as focal points for many trading decisions.
Support & Resistance
Moving Average (MA) is a
commonly used tool in
technical analysis that helps
to smooth out price data to
identify the direction of the
price trend. In addition to
serving as a trend indicator,
moving averages are often
used as support and
resistance levels.
Support & Resistance
Fibonacci retracement is a widely
used technical analysis tool based
on the sequence discovered by
mathematician Fibonacci. In
financial market analysis,
Fibonacci retracement levels are
determined by dividing the vertical
distance (usually the high and low
points of price movements) by key
Fibonacci ratios (mainly 23.6%,
38.2%, 50%, 61.8%, and 78.6%).
These ratios are considered
potential support and resistance
levels.
Support & Resistance
Role Reversal of Support and Resistance

A key concept in technical analysis is the role reversal of support and resistance levels.
W h e n a s u p p o r t l e v e l i s b r e a c h e d , i t o f t e n b e c o m e s a r e s i s t a n c e l e v e l . C o n v e r s e l y, w h e n a
resistance level is surpassed, it typically turns into a support level. This role reversal
occurs because the supply and demand dynamics change, causing the breached level to
reverse its function.
THANKS
Harsh Singh