It was a fourth straight week of gains for the Indian markets this week, thanks to ample support from Reliance Industries. The stock hit multiple record highs and investors continued to mop-up the oil to digital player.
For the week, the Nifty ended higher by 1.6 per cent, while the Sensex too ended with a similar rally. The broader markets saw some good buying this week, with the Nifty small cap and the Nifty Metal index gaining as much as 3.5 per cent each.
Many individual stocks continued to rally with Karntaka Bank jumping 6 per cent on Friday, following a spectacular set of results. The Bank managed to increase its net profits by 13 per cent, even while gross NPAs and Net NPAs fell, despite the period March to June being impacted by Covid-19 closures.
Consolidation likely for markets next week
The markets are expected to move in a range next week, though the probability of a fall from these levels is highly possible. The Sensex and the Nifty have rallied for four straight weeks and there could be some selling that emerges at higher levels.
Rising Covid-19 infections could also remain a cause for worry. India is seeing a record number of infections along with the US. Some parts of India continue to see a lockdown for a certain period like Uttar Pradesh, Pune and Bengaluru. If infections continue to mount, we might see some reaction in stocks as lockdown gets extended in more cities and town damaging economic prospects.
The markets have rallied a fair bit since March lows and given that earnings are likely to be hit badly, this year, markets seem to be overvalued at the current levels. If you have already invested, you may continue to stay invested. However, it is not advisable at current levels to take fresh positions. Investors may just do well to stay in cash and buy only if there is some serious dips in the market.