- Nifty - Without any doubt, market is in euphoria phase and has taken a leap forward in last few days, also MA(100) trending above MA(200)
- McClellan Index - Trending higher and remains well above EMA(59)
Before we set out some scenarios lets understand few things. Change in government is a major crossroad for any country as it decides the fate of that country economically as well as financially. Next 6 months to 18 months will be key in understanding if this new government is indeed in a capacity to establish bold reforms along with strong policies as well as deliver on their promises made during election campaign. How does this matter to any investor!!!
- Speculators continue to drive euphoria even higher in coming weeks/months and take this market 25-30% up from its current level. Usually at such juncture, everyone is bullish and valuations are not in sync with fundamentals. Such a move will NOT be sustainable and it is only matter of time when market collapses and it catches everyone off-guarded there by causing maximum pain. This phenomenon is also known as pump and dump, however it takes 6-18 months to unfold entire episode.
- A natural pullback/correction/sideways action is allowed there by providing breathing area for this market. Such a step by step approach is extremely bullish and very well sustainable for many years to come providing significant gains.
What does it mean for our Investments?
- Mutual Funds - If invested in equities then enjoy the gains but don't get too greedy. If invested in liquid funds or FDs and missed the entire rally then DON'T panic and DON'T make stupid mistakes, instead wait for next low risk entry.
- Stocks - If you have 30-50%+ gains in any position then take some gains off the table and use STOP LIMIT for remaining position. DO NOT get tempted to jump in market at any cost, be patient. Take a look at trade size calculate here to calcul
Market remains in euphoria phase and extremely bullish...