FOMO could take markets higher; expecting 21,000 in December: Rahul Sharma

economictimes.indiatimes.com:

Rahul Sharma, Director, JM Financial Services, says “it is better to look at relative setups, stocks and sectors which have not participated in the last few days of rally. So relative setups become the go-to trade at this point in time. Do not chase the ones which have already done well and are already topping the charts on long term time frames. The best thing to do is something like banking, which is still away from its life high.”

I remember the note which you had put out at JM quite ahead of the curve. You had it spot on. Such a big gap and it is not even giving any fresh buyers an opportunity. There is not a single pullback on an intraday at least till 12 noon. I mean, what do the traders do? They will have to play, chase the stocks. What are you recommending to your clients?
There are three things happening here. One is the market was very light in terms of the long positioning. In fact, on the way up in the last week it was primarily a short covering rally. We saw both the indices Nifty, Bank Nifty, OI shedding by 15% week on week. We saw index components lose as much as one third of their open interest in a week. It was supposed to be the breakout that we all were expecting. Now what has happened is we have seen a short covering. Longs are very light. FIIs still have some residual shorts which means that a lot of people have missed out on this rally.

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So what we are expecting here is that the fear of missing out (FOMO) could take the markets even higher and we