By VK Sharma
In my last fortnightly article, I had said markets like to climb the wall of worry! And the markets did just that.
The Operation Sindoor commenced in early hours of May 7. The Nifty fell to a low of 23,935 on May 9, losing 444 points, or 1.82%, from the close of May 6. The Nifty then rose (1,181 points or 4.93%) to an intraday high of 25,116 on May 15, before closing the week at 25,019 on May 16.
As expected, the markets first fell when hostilities had broken out and then recovered to recoup all the losses and close higher.
The jaw-dropping precision with which the Indian forces destroyed terrorists’ structures in POJK and Pakistan has the world in utter disbelief. Turkish and Chinese drones were neutralised by our indigenously developed air-defence systems.
This is the first time in modern warfare history that any country has demonstrated a fully indigenous, AI-coordinated, satellite-linked, autonomous battle technology. The world is stunned.
Wall Street rallied as the US and China smoked the peace pipe in Geneva. The two countries agreed to a 90-day suspension of reciprocal tariffs as a goodwill gesture to facilitate negotiations towards a broader trade deal.
For the week, the Dow trotted 3.4%, the S&P 500 cantered 5.3% and the Nasdaq Composite galloped 7.2%.
The gains in the indices came about despite a sharp rise in one-year inflation expectation from 6.5% to 7.3%. It means the markets expect the inflation to cool down if the tariff truce holds.
The trade agreement between the US and China has prompted Barclays to upwardly revise its US growth forecasts, predicting that the world’s largest economy will not slip into a recession later this year. It now expects the US economy to grow 0.5% in 2025 and 1.6% next year. Earlier, the bank had pencilled in a de-growth of 0.3% this year.
Coming back to our markets, the Nifty has risen 15.06% from the bottom of 21,743 seen on April 7, 2025. The all-time-high mark of 26,277, seen on September 27, 2024, is still 1,248 points, or 5.02%, away.
For the week, the Nifty rose 4.21%, while Nifty Smallcap shot up 9.17%. Among the sectoral indices, the NSE Defence pole-vaulted 17.21%.
The next resistance is 25,116, the high seen on April 15. The inverted head and shoulders pattern as discussed in last two articles is working, the target of which is 25,650.
Consider putting stop losses.
The author is a market veteran. He retired from HDFC Securities as head of PCG and capital market strategy.
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