Weekly Market Recap
Post sign of reversal last week when NIFTY moved above pivotal short-term moving averages, it was expected for the indices to rise further smoothly. And, in yet another consecutive week, precisely the same happened when market continued to surge like a blow-off and ended the week with sold gain.
In the week gone by the benchmark SENSEX surged by whopping 1863 points, or 5.75% to close at 34287, similarly, NIFTY gained 561 points, or 5.86% to settle at above 10K mark at 10142. While BANKNIFTY did exceptionally well with a gain of 9%.
Current Outlook
Extreme pessimism can really push stocks implausibly higher, and this unexpected V-Shape recovery during pandemic has certainly proven that. With the country emerging from mandated lockdown that initially had no end in sight, the stocks choose to ta longer steps to coming out of the woods effervescently and with greater resonance.
Perhaps, the market has factored in the bright spot much earlier in the event of reopening of economy. Or, the market is becoming one giant short squeeze, means trapping all the shorter at every level. When bulls get belligerent, the bears get slaughtered ruthlessly. As shorter are obliged to buy back their shares to cut out their losses as a result, this act generates a forceful buying which lead to sharp rally in stock prices. Unequivocally, this kind of rally, sporadically may go up to the previous highs
NIFTY is still down 20% from its peak, nevertheless it has recovered more than 50% of its losses from the bottom, however, the momentum doesn’t seem to fade away sooner, rather its accelerating. Technically, NIFTY still has enough room to advance further before indicators become over-bought and next plausible resistance seems to be at 11k mark which is 10% away. Hence, outlook at least for next week appears to be brighter but with caution.
Conclusion
Generally, the blow off kind of rally are extremely tantalizing and cajole the trader and investors, but they tend to vanish suddenly. Therefore, that should be dealt with perspicaciously, in order to that I think it is better to take off the ride with individual stocks which provide extra safety in in term of little stop, and with higher growth opportunity.
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Plan your trade …!, Be a Savvy Investor..!!
Pankaj