Guest contributor and other agencies

The domestic equity market inched higher during the week gone by, on positive sentiments supported by good earnings performance of large corporates and a steadily improving geopolitical situation. The market largely ignored negative news, which signalled that the bulls have taken the reins again.However, market breadth and open interest levels are not supporting this feeling of positivity, which certainly is not going to support the current levels. A correction is likely in the market in spite of the overall optimism on the Street.But this vibrancy in the market and rosy optimism is not visible at the ground level. On one hand, consumer inflation is expected to reach monthly highs, while on the other, GDP growth is expected to slip towards the 5% mark. Such disparity in the economic factors and market sentiments often leads to prolonged corrections in the stock market.A major jolt to the deep-rooted players in the telecom industry from the Supreme Court verdict, directing them to pay billions of rupees in pending dues to the government, has largely been disregarded by the market in spite of these companies themselves raising doubts over their ability to continue as a going concern.Certainly, stock prices are not reflecting these grave realities. Such circumstances distinctly signal that Mr Market is currently mesmerized by the optimistic outlook, but the reality is far from what the market imagines it to be.The long-drawn Essar Steel insolvency case got its much-needed closure on Friday and the ruling finally gave the discretion to the committee of creditors consisting largely of PSU banks on the distribution of funds, which will create additional liquidity for these lenders. This would have positive cascading effects on the overall economy, while reducing the government burden of capital infusion in PSU banks.Other pending resolutions would follow swiftly, and they would in turn rejuvenate the credit market in the economy, especially through PSU banks.Nifty50 is entering a sideways-to-narrow range, consolidating the gains made since September. Prices are likely to remain volatile intraday, but closings are expected to be in a narrow range. Breakouts tend to fail during corrective phases and, therefore, traders are advised to stay cautious. Stock-specific actions will remain in the limelight during the corrective phase. Traders should buy on decline with protective stops.Since the earnings season is almost over, Mr Market will take cues from international factors namely Sino-US trade deal, Trump’s impeachment and the nitty-gritty of the long-awaited Saudi Aramco IPO. Lack of positive triggers may certainly keep the market dull and rangebound. Stock-specific movements will be more prevalent than movement in the broader market. Investors should wait patiently for corrections to unfold, which may take some time. This was best articulated by Warren Buffett , when he said that ‘The stock market is a device for transferring money from the impatient to the patient.’Profit booking can be considered in sectors that are richly valued. In general , the market will unlock opportunities at reasonable levels in quality businesses.Nifty closed the week gone by 0.10% lower at 11,895.