Focus shift to large-cap stocks

New Delhi: Markets in the week went by shifted gears dramatically from Tuesday and for the next three days, there was high-speed driving at the bourses. This resulted in big gains and markets touching new levels and more importantly, crossing 79K on BSE Sensex and 24K for Nifty.

It also brought to an end the highly volatile month of June, which began with election exit polls and then results which saw the biggest upheaval in markets in a very long time. At the end of it all, markets were up, having more than regained losses June 4 and seeing big monthly gains. BSE Sensex gained 1,822.83 points or 2.36 per cent to close at 79,032.73 points, while Nifty gained 509.50 points or 2.17 per cent to close at 24,010.60 points.

The broader markets saw BSE100, BSE200 and BSE500 gain 1.95 per cent, 1.67 per cent and 1.48 per cent respectively. BSE Midcap gained 0.42 per cent, while BSE Smallcap was up 0.37 per cent.

Sector rotation would be the key and wherever one finds sharp movements, the three-day theory must be kept in mind. You must enter on the first day and look to get out on the third day before the correction sets in and stocks are distributed. The strategy for the week ahead would be three-fold. Firstly, book some profits and take some money off the table. Secondly, concentrate on large-cap stocks and exit small-cap and mid-cap stocks. Finally look for sectors that create new movements for the quick entry and exit strategy. Finally, as we get closer to budget, expect sharper two-sided moves in the markets.

Markets gained on four sessions in a row during the week and saw profit-taking on the last day of the week. Two interesting observations during the week’s trading were the advance-decline ratio turning negative even though markets rallied sharply on Tuesday and Wednesday.