Trekking through the markets
Broader markets continue to surge as traders sense an opportunity
The local traders sensed a trade opportunity in heavily beaten down mid and small cap stocks. For third week in a row, the market action remained focused on broader markets. The benchmark indices also managed to close the week with marginal gains.
The market breadth was strongly positive. Volatility eased materially. Volumes were above average. Institutions were net sellers for the week. Small (+7%) and Mid caps (+4%) were massive outperformers. Commodities, infra and private banks were top outperforming sectors. Consumption and IT were notable underperformers.
Risk trade making a comeback as central banks provide back stop
An unprecedented amount of fresh liquidity added to global financial system encouraged traders to assume larger risk. Equities rallied across the world, while precious metals corrected and crude crashed again despite OPEC+ deal. Yen gained, treasuries were also higher.
Outlook for the week
The near term trend and outlook in Nifty remains neutral with risk reward fairly balanced. The outlook for Bank Nifty has however changed to positive with risk reward ration marginally favoring reward. However, since the momentum in the market remains very strong, the chances of a sudden change in the near term trend and outlook are significant.
Nifty traders may hold their short positions with a strict stop loss of 9331. The Long positions may be held with s strict stop loss of 8943 on closing basis. Bank Nifty positions may be held with stop loss of 19970 (for Long positions) and 21521 (for short positions.
Day trading may avoid trading between 8943-9331 Nifty range. Below 8943, sell first strategy should be used. Above 9331, buy first strategy may be used. Short term traders may create long positions in Bank Nifty with very tight stop loss, provided all long position must be closed if Bank Nifty appears closing below 19970 on any day.
Market trend and outlook
Indian markets last week
Global markets last week