Weekly Market Recap
Last week, I expected this week to be crucial for defining a next course of direction for the market as NIFTY was hovering at important overhead resistance which is 200 week SMA, though NIFTY managed to cross and marginally closed above that level, but still more work need to be done before we decisively conclude something as selling was quite apparent at higher level after knee-jerk reaction witnessed on Wednesday. However, market posted a positive week amid so much negativity.
In the week gone by the benchmark SENSEX surged 439 points, or 1.27% to close at 35171, similarly, NIFTY gained 138 points, or 1.35% and settled at 10383.
Current Outlook
Despite, so much negative news about the contraction in economy by IMF and major credit rating agencies, indices have been able to hold up the gains that’s a constructive move, or I would say at least for a time being, market biased is positive. Since market had a cascading fall in March followed by lopsided V-shape recovery that left everyone with no choice but with negative biased, however, kept itself (market) remained positive. This mercurial inscrutable move is quite normal and consider to be unimpeachable in the stock market, but it is not conspicuous to the eyes. This makes me to believe that “the most essential thing in life cannot be seen by naked eyes”. I think, it’s a quite incisive statement abstract by the book which I am reading presently.
Well, some of my other analysis is marking some caution, as we may start to see a bearish bias moving into the majority of stocks. Unequivocally, the chart below shows the NIFTY is in uptrend for quite some time. However, the chart also clearly shows the weakness in one of the prominent indicators RSI in lower panel which is not aligned with the movement in price that shows the bullish momentum is diminishing. In contrast, one of the aggressive and heavy weight sector i.e. technology has emerged as a leader this week which is vehemently positive. Moreover, the market breadth appears to be in the stage of convalescence, that’s again positive.
Nevertheless, we are in the midst of bifurcation and ambiguity, but biased is still positive, hence, so as the outlook.
Conclusion
Among myriad of possibilities the probability for the NIFTY to reach to the previous high is getting strength, currently NIFTY is precisely at the middle of the high-low end of the range which can be prove otherwise at any point of time. However, provided the way selling is being absorbed at higher level since past few weeks indicates gradual accumulation is happening on the way up which can turn out to be steep escalation in prices. Hence, we should be prepared for buying opportunity among well positioned individual stocks.
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Trade your plan…!, Be a Savvy Investor..!!
Pankaj