Markets had a decent week and expiry. Nifty not only defended 9900 but also managed historical closing above the 5 digit mark. Markets were up about a 1% point this week with Nifty above the 10k mark. The sentiment is bullish. Is it euphoric yet? Well difficult to say or judge but to our best understanding not yet. Lack of clear negative triggers and ample liquidity are keeping the markets afloat for now.
Results continued with positive surprises in Yes Bank – the stock rallied 10%! The seasons bulk of the news flow is behind us, however some crucial pockets still to come out. Mid caps will continue to be in action and it will be worth to see how some of them react to individual results. The valuation in the mid cap and small cap space seems to tell you a different story.
Technically speaking, Nifty should be in the process of shifting the base to 9900. Till that is defended, bulls need not worry. At the same time 10100+ was the high it hit on its way up. Automatically that becomes the level to cross. Since these are historical highs, it is difficult to claim resistance. No calculations would work.
Having said that – we continue to believe that nothing has changed fundamentally for the market. Nifty still trades at a historically high P/E multiple. Liquidity and lack of negative triggers are keeping the bears at bay. It may be wise to exercise extreme caution when you are investing. One cannot expect to make huge money in the short to medium term by investing at these levels. Stock picking should be the focus.
As mentioned in the last week Pharma was on caution and results of Dr Reddy proved to be the trigger. The index corrected 600 points and now is dangerously poised to go lower. Watch out of Nifty pharma 9400 levels as bears will be active to break those. Caution is also advised in metals space as Nifty metal hit a weekly resistance and failed to keep up. Rally seems to be losing steam. The Nifty bank is nothing less than euphoric and overbought. However further upside cannot be ruled out as it is in one of the best bull runs in recent times. This space should continue to see some action coming week. Other sector that should see some funds chase stocks is Infra. Watch out for the Nifty Infra index as it sustains above 3300 – there should steam left in this rally.
