Weekly Market Recap
Last week, I wrote that the bearish setup is making progress and given the voracity of decline and weakness looming across the sectors, it is quite likely that NIFTY may lose the support of the previous low and it’s time to reengage the shorts. This week market plunged completely in line with my analysis and expectations. Though, a decent bounce came in on Friday still the pullback was deep enough for the week.
In the week gone by the benchmark, SENSEX plunged 1614 points, or 2.47% to close at 63782, similarly NIFTY dived 495 points, or 2.53% to close at 19047. While BANKNIFTY fell 2.15%.
Current Outlook
The NIFTY has fallen about 6 percent from the September all-time high, and the last two weeks have been pretty rough for bulls, especially since the NIFTY fell below the 50-day SMA (green line) this week the decline gathered pace which has resulted in a cascading fall as we can see in the chart below. Now the question arises, so should we be looking for the Bear to take charge again?
First, if we look at the daily chart, NIFTY has fallen to 18850 close to the crucial level of 200-day SMA (black line) which is at 18600, so there is hope that it may take support at these levels while consolidating for a few days and then again start inching up. Second, if we look at the long-term weekly and monthly charts then of course there is enough room for deep correction. I have mentioned several times in the past that on the long-term chart, the technical conditions are getting vulnerable and can only be resolved by a significant correction. I won’t be surprised if we see the NIFTY correcting up to the 17K mark, in fact, that would be a great entry.
Hence, we need to see whether the current decline will hold the support at the 200-day SMA on the daily chart or this could be the next down leg of a deeper correction.
Conclusion:
What next? As there is an ambiguity between daily and monthly charts, considering the long-term price top, it is quite likely that bear may take the charge. However, provided the indicators on daily charts have reached the bottom of the range which offers some hope that at least in the short-term bottom might have been placed. The best thing I can say is we should close the short positions and wait patiently.
Feedback, comments, suggestions, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj