Nifty Year to Date is up 13.89%. I know it does not sound like a lot but the bullish structure has enabled lots of stocks to outperform by a wide margin. Let us break down how the Nifty has navigated 2021 so far.
Nifty in 2021
Here’s the Nifty daily chart –
2021 started well but during the middle of January ahead of the budget, Nifty sharply tanked from 14700 to 13600. There was a real concern around the budget (Point 1). But then the Budget altered investor sentiment pretty dramatically and Nifty from 13600 on Feb 01 rallied to 15400 by Feb 16, 2021. It was a 13% move in just 2 weeks. Nifty was cruising well near highs but due to sudden weakness in the Emerging market and concern around covid cases, Nifty sharply declined to fill the Gap which it had made on the way up.
There was a real fear of breakdown below 14300 in March-April when the country witnessed one of the darkest periods and health emergency of unimaginable proportion. The market did not break down and during the peak of the covid crisis, Nifty bottomed at 14200 scaled a comeback, even made a new high by late May and reached near 15900. It was an 11% move in 2 months between 19th April and 15th June 2021.
There were two episodes of Nifty making a move:
1. Feb 01-Feb 16 triggered by Budget; and
2. April 19 – June 15 [bottoming out at Gap filled support]
Nifty since then i.e. early June 2021
Nifty has been trading sideways to up since early June between 15450 and 15960. It’s a tight band of less than 3.5% Is anyone complaining? Nope because the broader market has been in absolute momentum mode. Nobody seems to be tracking Nifty nowadays.
Source: Chartalert.com
One big takeway from the above charts – As long as the index remains bullish, one can feel bullish about the broader market.
Fundamentals don’t drive stock prices.
How people perceive those fundamentals drive stock prices.
As a market participant/trader, keep an eye on how the market views the fundamentals than being obsessed with your own version of fundamentals. It means look at the price action and it tells you without bias what the market thinks about the stock. Once you read the price action, go and find the reason why the market has such a view on the stock, and be aligned with it.
This is the level one mind training every individual requires to be in sync with market thinking. This is the real fundamental of Investing. I call it Science of Stock Price Action
If price action fascinates you – then Science of Stock Price Action is a great place to start.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purposes. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers