The domestic stock market rejoiced during the week gone by as the Nifty50 tested all-time highs. However, the broader market was still lagging. Certainly, this is not a healthy sign.During strong bull markets, there is convergence; all stocks and sectors inch higher. But the current scenario is opposite. There is large divergence; majority stocks are showing lacklustre performance barring a few largecaps. Eventually, this divergence will lead to convergence, when even the smallcaps and midcaps will play catchup and the heavyweights will turn lower.Thus, one needs to approach the market sectorwise and disregard the Nifty50 movement. Being patient and remaining invested in smallcaps and midcaps rather than jumping the boat and switching to largecaps on the pretext that the grass is greener on the other side would be a bad idea. Convergence will happen slowly and the momentum will gain eventually.US President Donald Trump’s trade war is proving to be a blessing in disguise for Indian Prime Minister Narendra Modi’s ‘Make in India’ campaign.Currently, China exports electrical machinery equipment ($500 billion), computer and machinery ($382 billion), furniture bedding and lighting ($89 billion), clothing and accessories ($146 billion), medical apparatus ($70 billion) and plastic articles ($70 billion). All these sectors might benefit if Indian companies can quickly capitalise and capture the vacuum created by tariff wars.China being our traditional competitor, the tide is turning in favour of India. Companies such as L&T, ABB, Siemens, Lakshmi Machines, Century Ply, Greenlam, Havells, Wellspun India, Supreme Industries, Nilkamal, among others, can become attractive bets. There might be huge opportunities for Indian investors to capture.Events of the WeekTCS did a fantastic job of posting excellent growth of 23 per cent in Q1FY19. This positive surprise reiterates the fact that US’ intervention to slow down India’s IT engine has failed. The company posted a robust set of numbers, igniting growth hopes for the entire industry and its players.Although the market is at a new high, inflation and IIP numbers could be an early warning signals to an impending larger correction in the market. However, further confirmation is required to verify this trend.Technical OutlookThe Nifty50 has broken a minor hurdle and moved higher nearing the previous highs. But it looks like the upper resistance is very strong given the fractured nature of current rally wherein many sectors are lagging behind. A strong weekly close means that the Nifty50 will attempt to test its previous highs. Buy-on-dips should be the strategy for traders.

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Expectations for the WeekThe earnings season has just begun. Currently, the market is in a wait and watch mode. However, it seems the mood of the market is on the improving trajectory given the way it has responded to new IPO listings after IPO prices have moved higher, which suggests sentiments are still nascent and there is room for improvement. Otherwise during hysteria new IPO listings go crazy. Stock prices are expected to move higher and gain momentum as the earnings season unfolds.On a sectoral front, the FMCG sector is challenging all valuation benchmarks and has moved higher, but restraints should be exercised, and investors must not get carried away by the herd mentality.From a long-term point of view, OMCs, realty, cement, textiles and infrastructure look attractive given their reasonable valuations.The Nifty50 closed the week 2.28 per cent higher at 11,018.