The bulls were on fire with Nifty closing at record high levels for the second consecutive trading session on Tuesday.
The D-Street bulls are in a mode of ‘eat, sleep, wake up, make a new record high & repeat.’ Nifty jumped 1.36 per cent to close above the 12,600 level for the first time ever. The advance-decline ratio of Nifty 50 was in favour of the advancers as 32 stocks advanced as against 18 decliners while the overall advance-decline was skewed in favour of the decliners. Once again, it was banking & financial stocks, which led the rally.
The price action for the day formed a bullish candle with a lower shadow, which clearly indicates the emergence of buying demand at intraday dips. Nifty opened the session with a gap-up; however, soon, it witnessed profit booking and filled the gap during the initial hour of the trading session. But soon, the bulls gathered momentum and moved higher to finally close near the day’s high.
The key takeaway from Tuesday’s session was that despite the index registering gains of over 1 per cent, the internal strength of the markets deteriorated as the overall advance-decline was tilted in the favour of the decliners. It hinted that the market participants prefer to take the profit off the tables in the broader markets. Further, despite these sharp gains and the positive global cues, India VIX jumped 7.28 per cent to 21.58, which is not a comforting sign. Despite the appearance of some cautioning sign, we would recommend being with a bullish bias as per the famous saying, ‘bhav Bhagwan che’, which on translation means, price is God. As price is making higher highs, we need to respect it and follow the trend. Why argue against what the market is telling you through the price action? Just hop on and enjoy the merry ride!
Let us reiterate that Nifty has a target of around 12,850 levels; however, the question now arises is whether it would achieve the level around Diwali or after a round of consolidation phase? Honestly speaking, the bulls are on a rampage and we might see this target coming sooner than later.
Overall, go with the trend but also maintain a trailing stop-loss on all the long positions as the bears won’t give any invitation before attacking.
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