Weekly Market Recap
It appeared that a lot has occurred this week, however, in fact, nothing significantly happened except developing a volatile condition that has resulted in precarious action and a sideways movement. Friday, we saw a huge gap opening, but that subsided to some extent till closing and the net weekly result was slightly negative.
In the week gone by the benchmark, SENSEX closed down by 271 points or .47% at 57919, and NIFTY lost 128 points, or .74% to close at 17185. While BANKNIFTY buck the trend and closed with a gain of .33%.
Current Outlook
Last week, I mentioned NIFTY may hover in the then-defined support and resistance, and this week; despite high volatility NIFTY continued to hover in the given range. It is important to note that the market is falling on no-news but bouncing effervescently on negative news; to me, this is the nasty distribution where shorter are forced to cover their position at a higher level, and at the same time buyers are tantalized at a higher level.
Falling persistently till Thursday, we saw a quick acceleration to the upside on Friday’s opening, causing many traders to recover their short position and renewed optimism among investors. But what a difference a day makes….
Since last October market is moving steadily lower but bouncing sharply in intervals and so far, bounces have been quite sharper than the downfall. But gradually market is inching lower, I think this is the sustained downtrend unless NIFTY break above the one-year-long falling channel and start making higher lows at least.
We have entered into the earning season, and most IT stocks have declared their numbers where the market reaction is appeared to be mixed, importantly we have not seen a sustained rally in any of the stocks. Financials will start announcing their earnings early this week we have to see how the market reacts to their number amid higher-inflation concerns. Overall, the outlook doesn’t seem to be propitious for the buyers, let the earning season be over and the price should settle down in a less volatile environment; then only we should take a call for a long position.
Conclusion
Can the market rally next week? Absolutely. Anything is possible. But given the above-mentioned conditions, I would tend to wait patiently and follow the guidance of my rule-based trading or investing model; which tells me to focus more on capital preservation over capital growth. Now is the time to remain vigilant, to focus on risk management, and most importantly be patient.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj