Market Status Change

Market status changed to confirmed uptrend

– The Indian market has been moved to a Confirmed Uptrend. Today, the Nifty rallied 1.7% on volume greater than the previous session, resulting in a follow-through day.

– Apart from strong global cues, declining oil prices strengthened the sentiment of investors who were looking to take positions in some beaten-down stocks after a major correction.

– What should you look for over the next few days? More follow-through days in the next week will strengthen the current uptrend. We will look for leadership among some good stocks to push the markets up and expect multiple high-quality stocks to breakout from their pivot points and reach new highs. For now, we recommend investors stay selective and buy only high-quality growth ideas exhibiting strong relative strength compared with the market.

– What could go wrong? Accumulation of distribution days instead of continued market strength would signal a weakness in the uptrend. In that case, we would witness failed breakouts in leading stocks. The Nifty is still trading below its 200-DMA; when it tries to retake that level, some volatility is expected. Therefore, one must not panic and should only invest in fundamentally strong stocks which are breaking out in above average volume. In case you go wrong, don’t hesitate to cut your losses at 8%.

– How to approach this market? Since these are the early days of a new rally, it is important that investors don’t play all their cards at once. We would suggest adopting an investment approach  where you begin with a small allocation and increase it as and when we advance further, with consideration to market direction.

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