Weekly Market Recap
Market once again changed its course of direction quite frequently, until last penultimate week I was expecting the market to accelerate its rally, however, last week it left an impression of reversal when NIFTY broke down below its crucial support level (11600), but only to rally again ostentatiously. After failing three times recently at 12k mark this time NIFTY managed to succeed closer to its previous all-time high.
In the week gone by the benchmark SNESEX gained whopping 2278 points, or 5.75% to settle at 41893, similarly, NIFTY rallied 621 points, or 5.34% to close at 12263. While BANKNIFTY outperformed quite significantly and gained over 12%.
Current Outlook
Market has achieved bullish path and all set to exceed its previous high. As I mentioned earlier, if financials continue to provide their support then NIFTY may achieve it previous high sooner than expected. And, this week rally absolutely belongs to banking stocks that made it possible for NIFTY and SENSEX to regain its previous peak. IT has been consolidating at higher levels and financials have been gaining ground in past few weeks, though they still have plenty of relative work to do. I think they will continue to perform well with some consolidation at higher level.
Last week, I preferred to stay out the market to analyse it more profoundly and I realised that last week action was a shake out session by smart money to get the short-term trader and small investors out of the market. If that is the case, then I think indices will continue to reach to its new all-time highs. The divergence among indicators became the case last week has resolved to most extent and leaving an impression to have a plenty of room before they become over bought. Some technical calculation suggesting me that current rally may take the NIFTY beyond 13K, however, I would still prefer to follow the stock-specific approach as it satisfice me based on risk reward ratio. Few of the banking stocks may still provide the descent entry after some sort of consolidation.
Moreover, the VIX which was on rise last week has fallen sharply this week and it has plenty of room to come down that further support the rally in NIFTY. Hence, outlook again has ameliorated ostensibly but caution is warranted as always.
Conclusion
Market is exceptionally fickle these days and we need to deal it ably. Sometimes staying out and not chasing the stocks is perfect strategy. Going long is not a bad idea provided NIFTY has long way to go but do not compromise with selling discipline if required.
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Pankaj