Weekly Market Recap
Last week I wrote that few large cap stocks were showing a sign of breakout that could lead the Indices (Nifty and Sensex) to their previous high, so as that happened this week on the back of strong rally especially in RELIANCE, HDFC, HDFCBANK, TCS and INFY.
The benchmark Sensex ended the week on buoyant note, gaining 883.77 points or 2.48% surged to all time high at 36541.63 and Nifty50 gained 246.25 points or 2.29% to settle at 11018.9, marginally below the previous high of 11069.
Current Outlook
What I have to say is – money is rotating in a big, big way with in Nifty and outside as well. Six month ago in January, when the market (Nifty and Sensex) made a new high, the stocks that were leading belongs to different group and today the stocks leading the indices are mostly different.
On Friday, market breadth (net of advances and declines) were incessantly weak that indicates only few stocks are dominating the market. How long that environment can sustain? Difficult to predict, but it seems to be new normal for a time being that certainly demand cautious approach with right selection of stocks. I’d categorise the environment as “cautiously bullish”. Technically, on a weekly chart both Nifty and Sensex appeared to have more room to scale up vigorously, however, on daily chart sign of overbought and topping is visible.
Earning season will be on full swing for next few weeks, so as reward and punishment based on the results delivered by the companies. However, market is not giving second thoughts on PSU stocks; money is exiting in a big way from them and I think that will continue for a while.
Conclusion
The charts are mostly positive, but the chart that speaks most loudly to me today is the weekly chart. The daily charts are showing a sign of overbought and topping, a configuration that most of this year has not been pretty reliable indication with more whipsaws. For that reason I’ll be looking for a weekly chart to get an entry and exit signal. Hence, my inclination would be to have a long position in selected, technically relatively stronger stocks.
I welcome any feedback you may have about the content of this article.
Invest & Trade Ruminatively..; Be a Savvy Investor..!!
Pankaj