Weekly Market Recap
This week started off with muted action and remained in a narrow range till Thursday, perhaps trying to digest the past few week’s solid gains, but an impetuous move came in on Friday that took the indices to new all-time highs. This last-day rally was being further fuelled by IT stocks which were quite standoffish for some time. The rise began post the earning announced by IT bellwether stocks, though the growth recorded wasn’t great and the future guidance’s uncertain yet the market rewarded the stocks. The best part is the gain wasn’t confined to a few names but all stocks did well.
In the week gone by the benchmark SENSEX gained 780 points, or 1.20% to reach 66060, similarly, NIFTY added 232 points, or 1.20% to close at a fresh high of 19564. While BANKNIFTY underperformed and lost 0.24%.
Current Outlook
The sideways muted action early this week on NIFTY has turned into a flag-formation as we can see on the chart below, which is quite bullish in nature. Astonishingly, the next implemented target posts this formation on the successful breakout is equal to the length of the poll which is huge from the current level i.e., above 20K.
It is interesting to note that on the resurgent of IT stocks banking stocks are taking a pause which is not bad; thus far, the major contribution came in from financials, and they may remain sideways for some time to get the fuel in the tank. However, provided their highest weightage a small pullback among financials may lead to decent correction in the NIFTY.
As I have mentioned in my past recent blogs it is prudent to remain stock specific rather than focusing on index. There are still much better and promising opportunities available among large groups of stocks which are providing a decent entry in various sectors, while at the same time index is getting vulnerable passing each day. Moreover, the VIX is hovering at the lowest level in 20 years which suggests complacency, but at the same, it is the best ingredient for an unheralded sharp correction.
Conclusion
Considering the above configuration and the strong upside momentum it is best to remain invested in the selected group of stocks, but always ready with the exit discipline.
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Be Patient; Be a Savvy Investor..!!
Pankaj