Weekly Market Recap
In yet another strong week the bulls feverishly extended their move to reach new highs bucking the global markets which have shown some weakness this week. However, some profit booking took place on Friday as a result indices alleviate half of its gain.
In the week gone by the benchmark SENSEX gained 561 points, or .87% to settle at 65280, similarly, NIFTY added 142 points, or .74% to reach 19331. While BANKNIFTY slightly underperforms with a gain of .40%.
Current Outlook
last week, I wrote that the exponentially rapidly rising or falling markets usually go further than we think, but they do not correct by going sideways and there are no new eras – extreme excesses are never permanent.
And it is quite apparent on the chart that the rise in NIFTY from 18700 to 19500 is nasty vertical, to me that needs to be resolved. Ideally, the price tends to correct up to the previous all-time high i.e., around 18900. In addition, the short-term moving averages, the previous high, and the base of the vertical rally are coinciding at about the same level. Therefore, the possibility of NIFTY correcting from the current level is quite fair.
It is important to note that the exponentially rising stocks are correcting sharply, hence trailing stop is required in these stocks. we are now in the throes of a different kind of market environment where we are being cajoled by the tempest move. Hence, it is our sincere duty not to chase the running stocks but rather buy them post-correction. Furthermore, I have mentioned a few times in the recent past that there are many stocks that have been breaking out of large consolidation and providing decent entry, and thus far, few of them have gained a lot, but there are many issues that are providing decent entry.
Conclusion
The indicators are demonstrating an over-bought condition in the market that needs to be resolved. Stock selection and the entry point are the key but always be prepared for deep correction as they may come out of nowhere.
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Be Patient; Be a Savvy Investor..!!
Pankaj