Newsletter for the week ended May 2, 2025
Market Sense, VCP charts and Ather Energy IPO Note
Market Sense
Weekly Market Update: Reliance Drives Nifty Higher, Mid & Smallcaps Lag
Indian equities posted a mixed performance this week, with Nifty50 advancing 1.28% (thanks to Reliance Industries, which surged over 9% on robust Q4 results), while the Nifty MidCap100 ended flat and Nifty SmallCap declined by 0.64%, reflecting underlying weakness in the broader market. Nifty500 (our preferred index) rose 0.72% and formed an inside bar on the weekly chart, maintaining its position above the 200-day EMA, a sign of strength. Global markets were also supportive this week, buoyed by positive developments in trade talks. Despite gains in indices, profit-booking was visible across the broader market after the recent rally.
Till last week, more companies had a positive or blockbuster reaction to their results than negative ones. But this week, as more companies reported results, the trend has changed a bit as the number of companies with negative impact slightly overtaking the positive ones.
Tariff risks have eased compared to last month. Geopolitical tensions between India and Pakistan have not derailed the overall positive sentiment. The IPO market saw renewed activity with Ather Energy’s issue, which was subscribed 1.5 times after a two-month lull (read Ather Energy's IPO note).
We view market dips as buying opportunities and maintain a positive outlook as long as the Nifty500 remains above its 50EMA. Looking ahead, tariff developments and India-Pakistan tensions will be key sentiment drivers.
In last two weeks, while Nifty500 has remained positive, the number of stocks above key short-term EMAs have declined, indicating lack of buying force in the overall market. Market breadth cooled down further from overbought levels this week, signaling more profit booking that followed the robust rally.
Volatility Contraction Patterns (VCP) for this Week
Following are the VCPs identified by our Pro-Setups Dashboard as of May 3, 2025. Please note that in our Dashboard, we only identify 3T VCPs & above and the list gets updated everyday.
Max Healthcare
Windsor Machines
Manappuram Finance
Sandur Manganese & Iron Ores
Motherson Sumi Wiring India
Ather Energy IPO Note
The IPO market saw renewed activity this week with Ather Energy’s issue, which was subscribed 1.5 times after a two-month lull. We posted a Note on this IPO this week, which can be read here.