Weekly Market Recap
It was quite a week for the market. In line with my expectation, week started off with the plunge on Monday, but once again buyers came in at the lower level and managed to recoup all its losses, consequently NIFTY closed at the highest point of the day. Overall, it was the roller-coaster ride with positive biased where indices finished the week in the vicinity of all-time high.
In the week gone by the benchmark SENSEX gained 580 points, or 1.11% to close at 52925, similarly, NIFTY added 177 points, or 1.13% to settle at 15860. While BANKNIFTY after two weeks of underperformance lead the gain by over a percentage with a gain of 2.33%.
Current Outlook
Last week, based on the technical setup and negative divergences, I expressed my cautious view on the market. The given setup work precisely in line with my expectation and market produced one more knew-jerk or shakeout reaction. Likewise in the recent past week, the intense selling was once again being absorbed nicely that has resulted into some sort of resolution in negative divergences. Furthermore, the upside momentum which had been deteriorating since past two weeks has found its way that may further produce a fresh rally to new all-time high. The ameliorate condition is being caused by the improvement in banking stocks as they look like to have reversed the recent downtrend. However, we should wait at least next couple of session to decide the sustainability of the reversal.
However, the configuration seems to have ameliorated but fading participation in this week is becoming a problem. The number of stocks participated in this week rally is less as compared to last rally. This condition can persist but cannot continue for quite long. Therefore, we should analyse the coming week action profoundly before rushing to buy. Although, the negative divergences have resolved to some extent, but there are still sharp divergences on the stocks even with the improved readings this week that needs to be monitored carefully.
Last week, we have witnessed the lower reading around 10 on VIX which ideally indicates the topping action on the indices, but it didn’t get going lower this week and hovering around 15 which support some higher prices. Hence, provided some improved and some unresolved conditions current outlook seems to be flummoxed with positive biased as regained momentum favours the bulls.
Conclusion
As far as momentum is concerned, we have some assurance that there should be still a lot more for prices to run higher. However, at this point fading participation and unresolved negative divergences suggest the current short-term and intermediate-term rising trends are in jeopardy. Hence, we should wait patiently before pondering meaningful decision.
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Keep Analysing…; Be a Savvy Investor..!!
Pankaj