Weekly Market Recap:
In my previous blog, I had talked about possible downfall after having a failed breakout above 10620 zone, and this week until Thursday, market or Nifty50 saw fierce consolidation with in previous week range, however, on the last trading day of the week, the Nifty attempted and succeed to move past previous week high after showing a lot of resilience through the week.
In the week gone by, the benchmark Nifty ended the week, gaining 188.25 points or 1.77 per cent before closed at 10806.5. Similarly, BSE Sensex gained 620.41 points or 1.78 per cent and closed at 33535.79. The best performing index was banknifty which has gained 787.75 points or 2.99 per cent.
Current Outlook:
Although, market is always right in choosing the either course of direction, however, I think it is pertinent to bring in some viewpoints to harbor on:
- Like now, it is the rarest of rare scenario when market is moving higher without love; means market breadth (net of advance and decline) is persistently weak, even on Friday when nifty scaled up higher substantially, advance decline ratio was 0.65, which should be at least closer to 1 if not more.
- Groups of stocks from mid-cap and large-cap are declining significantly, like in pharma sector, stocks are making or close to fresh lows after a long period of consolidation that suggest smart or big money is exiting from these group of stocks, perhaps, due to uncertainty about growth prospects.
- Gradually, Index is being dominating by only few stocks which is not healthy, like in banknifty only 5 private bank stocks have a weightage of more than 60%, similarly in Nifty, private banks and technology stocks are contributing more than 45%. No doubt, this could be new normal and money only chases the stocks where growth projection is always high. But this scenario could make these selected stocks quite expensive and slight disappointment in next quarter earnings may lead to sharp and deeper correction.
- Technically, angle of ascent as depicted in chart below invite attention and warned caution. The rising angle of ascent is same as we saw in January and that typically resolve in serious downtrend.
Hence, above are some serious assumptions which I thought need to be ponder, however, I have also found some group of stocks which are moving sideways or consolidating since last 8 to 10 months and now started to move higher with the descent angle of ascent which may continue to scale up.
Conclusion:
To review, it seems indices are moving higher, and it may not be over, the downfall or correction has failed to appear. I should emphasise that overall market climate has turned unfavourable, but buying the relatively strong and shorting(selling) the weak group of stocks with good risk-reward ratio may be the best course of action, particularly when the short-term indicators are bifurcating in that time frame. Last but not the least, never forget to keep the stop, if it required executing.
You may write your comment or ask any query below here.
Enjoy the ride..!! Ba a Savvy Investor..!!
Pankaj