Market Recap:
Before I sum up the last week action I am taking exactly the same line from my previous blog, “My experience says that, a failed break out, most of the time if not always end up with a fresh breakdown, which is below 9686 (August low)”. As I warned, On Monday Market started off with steep decline and continued to trade lower till Thursday morning. Thursday witnessed a volatile session on the back of expiry day for derivative contracts, hence market managed to recovered from just above the August month low, as it is depicted below on the chart. On Friday, market took off very well with a gain of approx 0.85%, but again seller became active before closing and market off the day’s high, closed with marginal gain. The Sensex closed at 31283.72 points, after shedding 2% in the week, similarly, Nifty50 closed at 9788.6 points after losing 1.76%. Friday ended up weekly, monthly and quarterly closing.
Domestic institutional Investors (DII’s) invested a record Rs41507.41cr in this quarter ended September, their higher quarterly purchase of local stocks. However, a lack of interest from foreign institutional investors (FII’s) who sold $3.2 billion in Indian equities in the same quarter, perhaps on concern of flagging economic growth and an elusive corporate earnings recovery.
Current Outlook:
The question now is whether the pull back of the past week is over. I have a doubt. On the positive note, the market missed that August low by a razor thin margin, So that level can act as strong support and market may remain sideways before logging a fresh move. Next trigger for the market would be the kick start of impending earning season from second week of October. Historically, coming quarter from October to December has proved to be good for equity investors, however, higher valuation, rising inflation, weaker than expected GDP data and widening fiscal deficit at this time may be a serious concern.
Conclusion:
For the last ten months the market’s advance has been steady and accelerated and there was no sign of any serious weakness or technical damage had been witnessed before past week correction., however, last week price action suggest that it’s a time to be cautious, if we break down below 9686 then I believe deeper correction can’t be ruled out. Hence I would suggest be prepared and chose a relatively stronger stock while keeping in mind risk reward ratio favorable and never forget to keep a stop.
Stay Alert…. Be a Savvy investor..!!
Pankaj