How are the Markets Looking ?
February 21st unfolded contrary to expectations set by the previous session’s breakthrough above the 22,100-odd point mark. Despite anticipations of continued market ascension, a significant reverse movement ensued, largely attributed to what is suspected as FII selling. This shift resulted in a bearish engulfing candle, dampening the budding enthusiasm for new highs despite achieving a new high at the opening. Such candles, where the opening equals the high, often signal a short to intermediate-term peak.
Despite various market peak predictions, accurately timing the market remains a formidable challenge, with bull market tops characterized by prolonged euphoria. Historical peaks, such as those during 2003-2008, often went unrecognized until after they occurred, underscoring the market’s unpredictability. Experience suggests the importance of remaining invested with strategies that pivot away from declining stocks towards those on the rise, rather than attempting to time market entries and exits, which seldom works for the vast majority.
Nifty Heatmap
The day concluded with a predominately red Nifty heat map, with notable exceptions like State Bank of India and Tata Steel seeing gains, while sectors such as energy and IT experienced declines. HDFC Bank, in particular, faced disappointment, contradicting optimistic expectations set by a 5% jump in its ADR the previous night.
Sectoral Overview
Sector-wise, banking Nifty showed resilience with a 1.2% increase, buoyed mainly by HDFC Bank, while real estate stocks also saw notable gains. On the contrary, IT stocks faced a downturn, with significant players like TCS, Infosys, and Wipro taking hits.
Mid & Small Cap Performance
The overall market sentiment was subdued, with mid and small caps not rallying to previous highs and instead showing signs of short-term weakness.
Nifty Bank Overview
Nifty Bank presented a promising chart, shedding only a minor portion of the previous day’s gains, indicating robustness among the indices.
Nifty Next 50
Nifty Next 50, despite a bearish engulfing pattern, appeared minimally affected due to its preceding rally.
Highlight – Nifty IT
The IT sector’s fate seems tied to Nasdaq’s performance, with a keen eye on how leading tech stocks there will influence domestic IT stocks.
Highlight – Nifty PSE
Public sector enterprise stocks have hit a pause, requiring a breakthrough for further gains.
Highlight – Nifty REALTY
The real estate sector, breaking out from its previous range, suggested potential for long positions with minimal stops below the breakout point.
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