Weekly Market Recap
Last week, I wrote that I was expecting a pullback or correction in Banknifty on the back of correction in private banks, and eventually we could see a mild correction in Sensex and Nifty in response to Banknifty as financials has a weightage of more than 30% in Nifty, but it didn’t happen. I was wrong, market (Nifty and Sensex) continued to scale up to new heights. However, my sense of seeing a correction in private banks was absolutely correct. Major Private Banks like; Yesbank ,Indusind bank and Hdfc bank were down by -8.34%, -1.12% and -.42% respectively.
The benchmark index, Sensex ended the week by adding 393 points, or 1% to close at 38645, similarly, Nifty gained 123 points, or 1% and settled at 11680.
Current Outlook
Rotation of money is again being witnessed on Friday, when IT stocks which were on pause until last week after having a stellar run, again started to move up aggressively on account of dollar appreciation. And, pharmaceutical stocks after a long period of correction and consolidation just started to pick up; however, large cap Reliance witnessed some correction.
There is too much noise around the Rupee vis-à-vis dollar touching new highs and the heuristic view could be impending correction, but technically, so far the market has not taken it seriously. Therefore, it is pertinent to focus on the price action to get the prognostic move rather than to be an apocalyptic.
Moreover, the strategy to focus on individual stocks has been doing quite well since past few weeks. Hence, I would continue to focus on individual stocks which are giving nice buying entry point based on reward-risk ratio.
Conclusion
No doubt, historically, on all parameters like valuations and macro factors are not quite favorable that could convince me to expect a rally of some magnitude in near future, but rotation of money can make it feasible. As I have written earlier it could be new normal from valuation point of view, provided India is growing faster than the rest of the world. As of now the market seems relentlessly positive and irrepressible. Let’s hope next week’s action clear things up.
I welcome any feedback you may have about the content of this article.
Keep Analyzing..!!; Be a Savvy Investor..!!
Pankaj Saini