Weekly Market Recap
The week started off quite well with the decent gap opening in line with the expectation which was later followed by a minor pullback only to rebound at the end. The upside momentum is still intact. Our market has turned out to be quite resilient while completely ignoring the US Fed’s decision to rate hikes.
In the week gone by the benchmark, SENSEX gained 990 points, or 1.65% to close at 60950, similarly, NIFTY added 330 points, or 1.86% to close at 18117. While BANKNIFTY gained .65%.
Current Outlook
Though the market trend is clearly up, still I would describe it as a weird move as there are few things that are not acting in line with strong price action. However, the price is the primary and the most important factor to analyze rest are secondary. As long as price action is strong, we shouldn’t expect a sharp reversal, caution is needed though.
As per my observation, the current resilient behavior suggests that the maximum floating shares are in the strong hands which are not supposed to be diffused when sentiments are negative as it becomes difficult for them to offload these shares at the optimum level. As a result, the contra rally emerged opposite to public expectations and this rally may continue unless shorters are squeezed completely. The short positions in this market act as a cushion as shorter are obliged to buy at higher levels which ultimately triggers the price to even go higher. It is difficult to gauge how much higher the price may go, but certainly, the way the price is advancing vertically it will fall sharply to cause a ruckus in the market.
There are many stocks that are providing a decent entry with potential upside. Hence, it is time to be stock-specific rather than chasing the index, provided the bewildered indices movement.
Conclusion
The buying list is not big, the money is chasing very few stocks, and this is a risky proposition. Therefore, we need to be more stock-specific where the exit point is nearby and not compromise with your exit discipline.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj