InvestorQ : Why is the market positive last few days overpowering macro concerns?
Anusha Savla made post

Why is the market positive last few days overpowering macro concerns?

Answer
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3 months ago


In the last three trading sessions, Indian equities bounced sharply, outperforming the global peers erasing most of the losses for the month of May. The rally was led by financials, especially private banks as hopes of economy reopening prompted traders to cover their shorts. Volatility eased further. Market activity was significantly above average. Market breadth was superior, though broader market indices underperformed the benchmark.

Besides banks, realty and metals were the top performers. IT and Pharma underperformed materially. INR gained some strength and Bonds were sold.

Despite rising tension between the US and China and a spate of poor economic data, the risk-on rally in global markets continued with equities gaining smartly. Crude and Silver recorded good gains while gold ended marginally negative. USD was weaker, and US Germany bond yield spread at a multi-year low. Volatility eased further.

The outlook and trend for Nifty are unchanged from the last week. The momentum has gained a little bit but still remains average. The probability of any major change in outlook and trend is less this week. The risk-reward is mostly balanced with a marginal bias towards the downside.

The day traders may avoid trading in 9464-9617 Nifty range on a closing basis. Above 9617, the traders may adopt buy the first strategy; and below 9464 sells the first strategy may be used.

The long Nifty position must be held with a strict stop loss of 9364 on a closing basis. For Bank nifty, stop losses would be 18690. All prices spot.