Markets opened with circuits up after the unexpected outcome of the elections. Sensex and Nifty moved up 14.08 and 15.44% respectively. Almost everything moved up with the exception of front rung IT stocks. Mid-cap stocks moved up very sharply and half the stocks traded in f&o segment went up by more than 25%. Banking Index gained by one fourth too.
It is becoming increasingly difficult to fathom the reasons for a sustained rally in global financial markets. The momentum is up and hence it is risky to expect the markets to fall immediately. We might see a correction as sharp as the rally when the sentiment turns negative. The fundamentals will hurt the markets more than they hurt them now. Long positions should be contemplated only for intraday and long positions that hurt the most should be liquidated at the end of the day. Avoid carrying long positions. Wait for the change in direction for going short.
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