Indices do have their own way of peaking out. Up moves and peak outs are connected. What happens around an up move leads to a peak out. The up move must be clearly understood.

So, let us now deconstruct it. Usually, the defensive stocks lead the index movement. But, this time seems different. In the current move, it was infotech that moved first. Then, the beaten pharma stocks moved up. The consumer stocks followed with a swift surge. The financials, a handful of private financials actually, came up with a rear guard up move. Lastly, the commodity bellwethers moved up swiftly.

Most of them were raising monies using the uptrend. They either sold their own stock through a fresh issuance or monetised subsidiaries or intend to sell promoter stock. Clearly, a capital raising intent is very visible.

Broadly, this sums up how NIFTY trumped active managers. But, being too nifty isn’t good for the NIFTY. History has many instances when the NIFTY toppled when it was too nifty, right in the middle of aggressive capital raising by its prime movers.

So, racing the NIFTY maybe a mugs game in the near term. On the contrary, racing to safety maybe a better idea. Decipher how you can achieve safety with the right calibration.

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1 Comment

  • by saumya khichariya
    Posted August 3, 2018 1:22 pm 0Likes

    Shyam Sir, Your update in I trends have helped me immensely in understanding valuation , behaviour & macro part of investing immensely. I have learnt much more in past three days than studying various books and blogs in last 2 years.Thanks for the effort and eagerly waiting for the next podcast.( Meanwhile reading every post of yours since 2011 to understand some short history of Indian market)

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