Weekly Market Recap
This week was one of the rarest volatile week but not unprecedented for the stock market on the account of two major events, one is state election outcome on last Tuesday and second sudden resignation by RBI governor, when Nifty in a week had a wild swing of around 800 points (up and down). Although, market closed the week in positive territory.
The Sensex ended the week with a gain of 289 points, or .81% to settle at 35962. Similarly, Nifty gained 111 points or 1% and closed at 10805 after made a low of 10334.
Current Outlook
It appears that lot has changed this week, especially the sentiments that were not very positive until last week. Most importantly, first time after many weeks I found market breadth improve significantly particularly post-election outcome, but breadth remained strong for only two days and it deteriorated on Friday. However, I think we should not take much from 2-3 days data as opposite reaction may occur in the after-math of an event. And, it is quite obvious for the VIX to ease off post event. Normally, market behaviour is supposed to be contrary to sentiments, perhaps that is the reason market bounce-off sharply from their lows, despite not-having favourable election outcome.
There are many possibilities from here for the market, like:
- Mid-caps has fallen more than 30-40% or more consistently in last 5-6 months, will they bounce back or continue to be laggards ?
- Large-caps in auto sector has fallen 20-30% , Will they bounce back or consolidate for next few months or weeks ?
- Large-caps which haven’t fallen much, Whether they can correct in next few days or continue to rise ?
Possibilities are many and I think coming days or weeks shall bestow the veritable evidence in deciding one of these options, till that time we should analyse the delineation of the phases of charts.
Conclusion
I have identified the current bounce with a question mark, because I don’t know if it qualifies a resume bull market or a mere bounce in a bear market, as I believe we’re in bear market. It is difficult to imagine what lies ahead in a real bear market, but that would be very difficult. If things continue to improve in coming week then I have to re-asses the things and may abandon my views of bear market.
I welcome any feedback you may have about the content of this article.
Keep Exploring..!; Be a Savvy Investor..!!
Pankaj