Weekly Market Recap

With is this week end, the market concluded a remarkable month which remained one of the best in several months. The precipitous rally was predominantly fuelled by banking stocks and very few selected large caps, but certainly this month belongs to banking stocks both private and PSU’s. NIFTY ended the month on very strong note, posted a vertical gain of 831 points, or 7.70 %, while BANKNIFTY gained a whopping 3636 points, or 13.58%. in a month.

In the week gone by, the benchmark SENSEX gained 508 points, or 1.33% to settle at 38672, and NIFTY added 167 points, or 1.46% before closing at 11623, whereas BANKNIFTY continued to outperform and gained 844 points, or 2.85%.

Current Outlook

In my last penultimate blog I pointed out that this time I found a building up of same configuration which we saw in 2002 to 2008 bull market when consumer staples (FMCG) underperform and Infra outperformed  through out the bull phase. This month performance by FMCG stocks remained sluggish and on the other side infra tend to outperformed, especially infra led banking stocks or so called corporate oriented banks. And, after a bounce-off from lower levels correction seems to be continued in auto stock this week. To me, both consumer staples (FMCG) and consumer discretionary like Auto’s acted like a source of funds for heavy weightage sector like financials. Financials have a weightage of around 40% in NIFTY and the impact is quite apparent which has created a ruckus in the market.

However, as I wrote in my last few blogs it seems to be a stock specific market and I think that theme will continue for some more time. Instead of chasing the index one should stick to stock specific action and wait patiently. After a long time I found market breadth has improved and in commensurate with the direction of the market which is a good signal. The upside momentum is very strong but indices appears to be overbought in short-term. Hence, I have to say I’m neutral on index, but bullish as well as bearish on particular stocks.

Conclusion

This week condition looked like ripe for some selling provided overbought condition in short-term, but price (Indices) has stayed above at the peak till closing. Whether or not market will correct next week, the major indices NIFTY and SENSEX are less than 2% away from making new, all-time highs, however, BANKNIFTY is enjoying its new life time high. At last, I would say, it is clear that upside progress is predominantly driven by large-cap segment. This is less than ideal, but the fact is large cap stocks can drive the market for a long time and in a market like this entry point does matter a lot.

I welcome any feedback or suggestion you may have about the content of this article.   

Plan your trade, trade your plan..!; Be a Savvy Investor..!!

Pankaj