Weekly Market Recap
It was a weak opening for the market, on Monday indices plunged to the lower end of the range of the last two weeks but bounced off sharply thereafter to reach the higher end of the range. It was the big weekly swing for the indices from the lower to the higher end of the range. As I mentioned last week, indices may remain in the range of last week’s low and high, and so far, the market has turned to be in the same manner.
In the week gone by, the benchmark SENSEX rallied 1090 points, or 1.89% to reach 58786, similarly, NIFTY gained 314 points, 1.83% to close at 17511. While BANKNIFTY gained 2.5%, perhaps on the back of the banking amendments bill to allow the government to reduce stake below 50% in PSBs.
Current Outlook
The chart below suggests that NIFTY has reached a pivotal point. The red horizontal line which has acted as a support in the past seems to have turned out the strong resistance as it is quite evident in the past three weeks. we have to see whether the NIFTY would be able to have a break-out above that level or not. On the positive side, in the last four days, the market breadth was quite good and the individual stocks have once again started to gain stupendously with heavy volume. Most importantly, the financials which has led to the decline in recent sharp pullback seems to have taken support and contributed feverishly to the rally which has invigorated the downside reversal. In addition, the VIX which has soared to the highest level in one year has eased off significantly favoring the bulls.
However, provided the above positive factors, NIFTY has stopped at the pivot level. Technically it may face stiff resistance at the current juncture. Until NIFTY breakout smoothly above that level, it is difficult to prognosticate the further rally, but few individual stocks could be considered to buy those are breaking out of the resistance.
Hence, the outlook seems to be gaining the favor of bulls for selected individual stocks, but caution is still warranted.
Conclusion
The upside momentum is again building up and participation percentages are improving, giving it a bullish short-term bias. While breakout on NIFTY is still icing on the cake, if a breakout happens in the coming week, then I may expect the rally to go to the previous high. Unless that happens, we have to wait patiently.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj