Wish You all A Very Happy and Prosperous Diwali
Weekly Market Recap
Once again market rebounded sharply and headed higher, in fact, indices posted an impressive rally this past week amid quarterly earning reports. While not all companies posted strong earnings so far, still few big names came in with positive earnings surprises that were greeted with heavy buying that brought on super-sized gains.
In the week gone by the benchmark, SENSEX advanced 1387 points, or 2.39% to settle at 59307, similarly, NIFTY gained 390 points, or 2.27% to close at 17576. While BANKNIFTY lead the advance and gained 3.76%.
Current Outlook
The current rally is attributed to heavyweight Reliance and banking stocks. Almost all the private banks have posted a solid set of earnings till the time of writing, while AXIS has already reacted feverishly and reached a new all-time high, though HDFC bank has reaction was muted. Whereas ICICI and Kotak bank’s reaction is to be seen in the coming week as they posted the earnings on Saturday. I think the pack of banking stock will react in a similar fashion as a result NIFTY may further advance from the current level. Reliance also posted the result after market hours on Friday whose reaction is yet to be seen.
Technically, the picture which was appearing range bound until last week has improved a bit. Tuesday, gap-up opening past the blue horizontal resistance line, not only that this line is being well respected and acted as strong support in the following days. Although, the indicators below still reflect a bifurcating view; in favour and not in favour of bulls., even market breadth is not quite strong in the past few days. Still, first priority has to be given to the price action which goes in favour of bulls until 17400 holds on NIFTY.
While the given past year structure suggests that the reversal may happen at any time, however, a stock like AXIS bank made a new high despite too much pessimism is to be well considered in identifying the lengthy counter trend rally.
Conclusion
While a bullish response to positive earnings especially the banking stocks which have maximum weightage and a follow-through session after gap-up opening on Tuesday, all point to the upside for the markets, they do not mean that a market bottom has been put in. This is because other characteristics need to be in place which we should frequently review. At this time, we’re in a countertrend rally.
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Be Patient; Be a Savvy Investor..!!
Pankaj