Weekly Market Recap
In one of my last recent blog, I mentioned that based on some technical calculation NIFTY is giving a upside target of 13200 and this week the target is almost achieved but in a dramatic fashion, NIFTY touched a high of 13130 on Wednesday, but on a same day closed below 12900 followed by descent recovery next day (monthly expiry day). Although, it appeared to be quite volatile week still the move was confined in a range.
In the week gone by the benchmark SENSEX gained another 267 points, or .61% in a fourth straight week to close at 44149, similarly, NIFTY closed up by 109 points, or .85% at 12968. While BANKNIFTY continued to outperform with a gain of over 1%.
Current Outlook
Certainly, post this week action on NIFTY it looks like a sort of buying climax which I also stated last week that normally followed by sharp correction. Nevertheless, despite exhaustion climax overall market condition is still extremely healthy. Market breadth that helps to gauge the internal strength of market continued to be quite strong and the ratio of stocks making new high to low is surging incisively. Moreover, the VIX which indicates the complacency in the market has enough room to come down that further support the higher level on indices.
However, on the flip side the exhaustion move that we witnessed this week after touching a new high followed by sharp fall also suggest that perhaps benchmark indices might have touched a cardinal top at least for a time being and we are heading into sideways or corrective moves as far as NIFTY and SENSEX is concerned. In addition, the negative divergence on momentum indicators in below panel of the chart is clearly visible that ideally resolve with sideways or corrective action.
Combining above two aspects the market is demonstrating the trait of ambiguous move. Nevertheless, I think the market is looking to past the slowdown caused by COVID19 and may tend to consolidate after some correction, although the impending corrections may be sharp as it has been the case so far, but the over-all outlook seems to be positive in a foreseeable future.
Conclusion
It’s a time when selection of individual stocks and patiently right entry would be the key. The big movement in group of stocks is mostly tantalising, however, stick to well contemplating trading or investing idea is utmost important. And no matter what price does after hitting your stop you better stand out and wait for the next opportunity.
Feedback, comments, suggestion or questions are welcome at below comment section or at [email protected].
Be patient…; Be a Savvy Investor..!!
Pankaj