Decoding the stock market rally to new highs despite Covid pandemic

Momentum indicators suggest the market will keep running up until there is adverse news-flow; corrections as and when they come will be deep

The stock market hit a new high last week and continued to run up. There are many interesting aspects to this rally, which started about 13 months ago. One is disconnect between a rising stock market and fundamentals hit by the second wave when the economy had not fully recovered from the first wave.

On the technical side, look at breadth and volume. Is the rise of the major indices (Nifty/ Nifty Next, Sensex) backed by similar rises in smaller stocks? If there’s breadth and volume, across all segments, there’s more confidence about sustainability.

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