Did FIIs get motivated by the comment? They surprisingly turned net buyers of equity - worth Rs 6.84 Billion - during the first three days of trading this week. As per provisional figures, DIIs were net sellers of equity worth Rs 4.5 Billion.
Nifty, which had been consolidating sideways in a narrow range for the past 10 trading sessions, broke out and closed above 9400 for the first time since inception.
The Indian Meteorological Department's projection of a normal monsoon this year was probably the real impetus behind FII buying.
The daily bar chart pattern of Nifty rose to touch new intra-day (9415) and closing (9407) highs today. All three EMAs are rising, and the index is trading above them in a bull market.
Short-covering during the next couple of days may propel the index even higher, but bulls should be wary of celebrating too soon. Why?
Several technical reasons come to mind. The breakout today was not accompanied by any significant increase in volumes. All three technical indicators are showing negative divergences by failing to touch new highs with the index.
Nifty's TTM P/E has risen to 23.89 - much higher than its long-term average. The breadth indicator NSE TRIN (not shown) has moved up a bit but remains inside its overbought zone.
A bull market is supposed to climb a wall of worries. Nifty appears to be doing just that.
Remain cautiously optimistic and stay invested with a trailing stop-loss. Corporate earnings are yet to catch up with index valuation.