Weekly Market Recap:
In my previous blog dated 15-oct-17, I had mentioned that the market held breakout level at above 10147, which was a very bullish sign to me, since then Nifty50 has gained almost 332 points. Index continued to mark fresh highs during the week gone by, ended up at 10479 with net gain of 129 points, or 1.25%. Similarly, Sensex and Banknifty also closed at fresh highs at 33685.56 and 25650.70 respectively. Interestingly, fresh breakout in Banknifty is being witnessed only in last week, which has been relatively lagging for past few weeks, as compared to Nifty50 as it is depicted in chart below.
Sector contributed the most in last week in Nifty are Energy, banking and pharma. Defensive sector like consumer staples was almost sideways, which is again a bullish signal as the money is chasing aggressive sectors.
Current Outlook:
In this blog, I am covering technical part (shall try to cover valuation part in next blog) as it is more reliable analysis than fundamental at least in making an entry and exit decisions because fundamental analysis emphasis more on valuation rather than momentum or trend (which can’t be ignored). And the security can be over-valued or under-valued for the infinite period, that’s why technicians or chartists have an edge over solely fundamental investors but that doesn’t mean we should ignore fundamentals, rather perfect approach would be to use technical analysis on fundamentally strong companies to optimize the return.
No doubt, we are in strong uptrend. An uptrend means prices are advancing and higher highs are the order of the day/week. It is difficult to predict how long trend will persist, but there is clear evidence that trend persists, just look at the Nifty50 chart below since early jan17 for a recent example. The 50-days SMA (simple moving average) closed above 200-day SMA on 17-jan17 at 8178 (Nifty) and this golden cross remain in play – some 10 months later and 28% higher (now at nifty 10479). Dozens of stocks tell similar stories.
And now according to me, recent breakout in Banknifty would lend more support to Nifty50 to gain further. Hence overall picture is still quite bullish to me.
Conclusion:
Thus 70% of stocks in the Nifty50 have been trending higher for at least a year. Trend identification is important because it dictates what we should ignore and what we should watch. Investor and traders should watch for opportunities to participate in the ongoing uptrend. Pullbacks and corrections within an uptrend present such opportunities because the long term intact trend is expected to resume at some point. As always, I emphatically remind you of stop loss and enjoy the trend.
Please do write your comment or if you have any query.
Plan you investment.. Be a Savvy Investor..!!
Pankaj