New Delhi, Oct. 12 -- Dear Reader,

Last week, I wrote that markets could claw higher, read here, and prices validated my statistical hypothesis. The feel-good factor over a possible trade deal with the US and a phased ceasefire in Gaza kept hopes elevated in the bull camp. The rally was led by banking stocks. I have pointed out since I started writing this column that banking and financial stocks are the swing sector in the markets. This is due to the highest weightage these stocks hold in the Nifty. No sustainable rally in the markets is possible unless banking stocks are boosted.

Global financial markets remained in a state of denial despite deteriorating economic data. Germany announced weaker economic data and also proposed raising ...