Weekly Market Recap
As expected, it was quite a volatile week for the market but the way it has completely recovered vertically was a bit surprising. NIFTY, on Tuesday, amid the election verdict dived approximately 2000 points which was half of a percentage away from the lower circuit but closed off its lows. And till Friday’s closing NIFTY recouped all of its losses to close in the vicinity of an all-time high.
In the week gone by the benchmark, SENSEX gained 2732 points, or 3.69% to close at 76693, similarly, NIFTY surged 759 points, or 3.37% to settle at 23290.
Current Outlook
Looking at the 20 years of data we have on the NIFTY, I found the ongoing markup phase of the bull market is glorious to behold and participate in. But they do ebb and flow like we saw this week. The bullish run in the major indices has been persistent so far in 2024. Now, the major election event is over with a favorable outcome that will decrease volatility. So, the time has come to pay attention to studying the charts to determine the present position and possible future direction of the indices and stocks.
Though the strong uptrend is quite intact, however, we have witnessed a roller-coaster ride in the past few months, moreover, the recent plunge of 2000 points has shown how vulnerable the markets have become. The recent plunge should act as a stopping action that may lead to the rangebound condition and will further create the cause in the form of re-accumulation or distribution. On the monthly chart (below link), the NIFTY has climbed above the rising channel into an overbought condition. This condition must conclude.
Hence, we should be watchful for a change of character in the behavior of the indices going forward. The implication of this would be a reversal of the NIFTY back into the upward-striding trend channel as evinced by the blue lines. I think the recent sudden and sharp break into the channel is a sign of an upward trend exhaustion.
https://chartink.com/stocks/nifty.html
Conclusion
Moreover, the higher readings among the indicators below suggest that this should be resolved and correction along the way is inevitable. The current technical configuration is very exciting and indispensable, and not to be missed. Therefore, be watchful.
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Be Disciplined; Be a Savvy Investor..!!
Pankaj