Be cautious while travelling in the Runaway Train (Nifty). Passengers of the Runaway Train (Nifty) need to be cautious now. The current Nifty rally has hit the Euphoria phase. India is watching a Bullet train rally and probably the station is near by. Reasons behind the rally are:
1) Recent Assembly elections considered as Semi Finals before the lok sabha elections of 2024 met the market expectations.
2) US Fed continued a the rate hike Pause and there were some indications of rate cut cycle starting in 2024.
3) Some opinion polls suggesting return of the incumbent government for the Third time in India.
Political Stability is what market loves. If we add global factors like rate hike pause that gave a steroid dose to the markets.
The question is: What should the investor do now?
1) Book Profit in the risky / mid-cap / Small-cap stocks with weak fundamentals. At least partial profits can be booked.
2) Find avenues where growth is still possible. Choose stocks with strong fundamentals / Monopoly / Strong MOAT. (Some large caps companies fall in this category)
3) Look at the Technicals and Fundamentals of the company you are investing in.
4) Be very choosy.
I am an advocate of staying invested in the market come what may but portfolio rotation, some reshuffling profits into fundamentally strong players with vision for growth is need of the hour.
As far as support and Resistance levels are concerned the next fibonacci resistance will be at 21607. If the euphoria continues into reminder of the month we may even see the levels of 22180. If the momentum continues further into 2024 I see the rally reaching 22922 or 23000 levels. Supports at the lower level are 21235, 21078. 20795 level will be a strong support level falling below which bears will start breathing again.
