Weekly Market Recap
Market turned around and became weak this week and corrected up to the major support level. The heavy weights in particular weigh down the market that eventually made NIFTY to fall to the lowest level in a month.
In the week gone by the benchmark SENSEX tumbled 1071 points or 2.63% up to 39614, similarly, NIFTY tanked 287 points, or 2.41% to close at 11642. BANKNIFTY too fell in line with other indices and lost 2.36%.
Current Outlook
Well, the major support level 11600, I have been taking about on NIFTY penetrated on Friday but managed to recover a bit and closed off the low precisely at the support level. It is crucial to see whether support hold or break in coming week. However, the technical configuration which have changed abruptly are suggesting further weakness in the market going forward. Indices appear to be under pressure and may headed toward a retest of their September lows. Momentum rules everything, which was so far in the favour of bulls until last week has changed its direction and may accelerate further to downside. The VIX which has been restrained for quite some time around 20 level began to rise that is again a cause of concern.
In contrast, few of the individual stocks like Pidilite and Asian paint bucked the trend and continued to rise that indicate buyers still chasing the stocks where growth story is perhaps intact. In addition, the industrial stocks didn’t perform badly this week and trading above their support level and cement stocks too had a positive week, which provide some hope to buyers.
I like to look at the chart on different time frames and found couple of things jumped out. The lower highs on the weekly chart by some of the prominent indicators like RSI is genuinely concerning. The lower highs on momentum indicators are worrisome. The market is quite perplexed, and it seems ardour to prognosticate the impending direction in given conditions. Nevertheless, as I wrote above momentum rules everything; and it is shifting downward. Hence, outlook may turn out to be strenuous negative if NIFTY break below it support level.
Conclusion
Mostly sharp pull back comes unheralded when upside momentum got reversed abruptly. Sometimes it is good to watch the game from outside rather to be played every time to brush up your skills and I think it is one of those times when we should wait patiently and analyse the market from outside. Nonetheless, if you are a buyer or seller it is utmost important to be prepared with exit discipline.
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Be patient…; Be a Savvy Investor..!!
Pankaj