Weekly Market Recap
It was kind of a choppy first year of the new year, but the net change for the week was almost flat and the range was also less than one percent. A surge towards the new high on Thursday was followed by some selling on Friday, though the market recovered from Friday low but still closed down.
In the week gone by, the benchmark SENSEX closed down by 110 points, or .27% at 41464 and NIFTY lost 19 points or .16% closed at 12226, while BANKNIFTY lost over a percent or 343 points.
Current Outlook
Since last few weeks, I have been showing my concern the way indices have been advancing on the back of diminishing participants. Specially in last two blogs, I emphasized on the disconcerting steep angle of escalation on NIFTY since September 2019 low. It is quite apparent how the market had reacted post steep advance, click here (https://savvycapital.co.in/wp-content/uploads/2019/12/NIFTY_Weekly_22-12-2019.png). I am still coaxing a current vertical advance on NIFTY, but it has not yet served as we saw in past. And I see the steep advance is juxtaposed with the past, it is not sustainable unless we see some correction or consolidation in the market.
Last week, I also mentioned about the surged in gold and crude oil prices which further advanced this week mostly on Friday perhaps on the back of US air strike in Iraq on Iran commander, but chart suggested bullish move in advance. I expect the tension may further rise that will aid the rise in prices of gold and crude oil, which is not propitious for the equities. Hence, outlook seems to be perplexed with negative biased.
Conclusion
The trend of the market is up, and the negative divergence with the indicators is still intact that is likely to resolve with the correction in price. Additionally, the angle of ascent from the September low is quite steep and is, in my opinion, not sustainable. I continue to have concern about how over-extended the market is technically. A decline of some magnitude would alleviate some of the pressure, but the trend has to break first.
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Have a Profitable New Year..!; Be a Savvy Investor..!!
Pankaj