Weekly Market Recap
The uptrend which was quite intact until last week became strenuous as we progressed into this week. Though on Thursday we saw some serious corrective action, but this weakness got vanished with the strong gap-up opening on Friday as a result indices managed to close in the vicinity of all-time-high readings.
In the week gone by the benchmark, SENSEX surged 844 points, or 1.39% to close at 61795, similarly, NIFTY gained 232 points, or 1.28% to settle at 18349. While BANKNIFTY outperformed with a gain of 2.13%
Current Outlook
The move this week was dramatic especially on Friday, squeezing short sellers in a big way, which is also why the thrust up was extraordinary. For me, it was a great rally as the market completely ignored negative news regarding growth and inflation in the past few days. This could be the start of the new leg of the rally. However, sudden change in the course of action has been quite a common characteristic of the market in recent times. That we should all prepare for.
The VIX continued to alleviate towards a lower level now at 14 which is the lowest level in one year and has enough room to fall before calling it the bottom. Moreover, indicators in the lower panel of the chart have decent room to support the rising price. While on the other hand market breadth is not as strong as it should have been, despite closing strong on Friday it was barely positive or mixed. This behavior is flummoxed but with positive biased.
Last week, I expressed my observation on strong hands being unable to dispose of their shares at the current level as a result sharp and temporary rally may come in so that they can exit at an optimum higher level. In the meantime, few individual stocks are providing decent entry with potential gain. And this week turned out to be in a similar fashion.
Conclusion
I think, apart from technical and fundamental reasons, there is a lack of complacency which is enough to push the prices higher as VIX is also indicating the same. My bias, for now, is bullish, but no compromise with exit discipline.
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Be Patient; Be a Savvy Investor..!!
Pankaj