Weekly Market Recap
Finally, the bulls moved ostentatiously to take out the indices to new all-time highs. In the past two weeks, we have seen a drastic change in the market conditions; where last week there was a brief yet strong countertrend pullback precisely from the previous peak, whereas there was a sharp and significant turnaround witnessed this week that led the markets to fresh summit.
In the week gone by the benchmark SENSEX gained a whopping 1739 points, or 2.76% to 64718, similarly, NIFTY surged 523 points, or 2.80% to settle at a new all-time high at 19189.
Current Outlook
The dominant feature on the chart of NIFTY is the unrelenting angle of ascent. The heavyweights took charge to take out the markets to new all-time highs. Now, the question arises, Is the market getting frothy? The upcoming earnings will give the answer. Whether the angle of escalation is sustainable or not? I think we all know the answer, but as long as momentum remains intact rally may continue.
Moreover, there are groups of stocks in the index which have enough room to rise significantly from current levels which can further invigorate the rally. As I have been emphasizing for quite some time we should remain focused on individual stocks which are well-positioned. This idea is generating more return than the indices along with decent risk-return trade-off. However, indices’ vertical gain is becoming scary.
Post this rally the bulls will continue to see more upside while the shorter may dislike the rally for their own reasons, however, it’s indispensable to remember that the exponential rapidly rising or falling markets usually go further than you think, but they do not correct by going sideways. And there are no new eras – excesses are never permanent.
Conclusion
This most bullish scenario would imply that the recent trend just continues unabated, and the strongest name will get even stronger However, given the vertical upside it is our duty to act rationally and conscientiously, despite markets making new highs we should always be ready with the exit discipline.
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Enjoy the Ride; Be a Savvy Investor..!!
Pankaj