The Nifty has been on a roll in 2017, rallying by about 18 percent making new highs with almost effortless ease, thanks to the grit and gumption of the bulls. Life atop Mount 9.6k certainly sounds enthralling as corrections – both price wise & time wise – have been shallow in nature.
Having said that, a deeper probe into the 2017 corrective phases clearly highlights the transient nature of declines in the current structure!
During all corrective pullbacks in the ongoing uptrend since 26th December 2016, the index has not declined by more than 200 points.
The recent fall (from 17th May to 24th May) was limited to a mere 191 points, which undermines the market strength, and clearly, indicates that this is a ‘buy on dips’ market.
The narrow range index movement of last one week hints at the criticality of a stock specific approach given that Nifty has not witnessed a broad-based rally. Midsize private banks and FMCG are two spaces with discernibly inherent strength.
Defense of 9610 is essential for another attempt to retest zone of 9,700 mark; however, very few stocks are likely to participate in this rally. Hence, traders are advised to adopt a stock-specific approach.