Weekly Market Recap

In a yet another truncated three days week, indices headed nowhere but had slightly negative biased. In my last two weekly blogs, I have been writing about possibility of NIFTY failing to break above double top formation which we can see on the weekly chart and so far both NIFTY and SENSEX is getting stiff resistance preciously at the same level. Can we see higher level on NIFTY..?, Perhaps, next week will be decisive one.

In a short week gone by, the benchmark SENSEX was down by 104 points, or .27% to close at 38963, similarly, NIFTY lost 42 points, or .36% to settle at 11712.

Current Outlook

This week market may remain close to all time high, however, one more sector that is consumer staples (FMCG) witnessed fresh weakness on the back of losing growth momentum. Technically, I was expecting them(FMCG) to correct for quite some time, but they took a quite longer time than I expected, though they are correcting in line with my expectation. I think it’s just a starting of correction and may prolong in future provided they have been enjoying exceptionally rich valuation for quite long time. First, we saw sharp correction in consumer discretionary stocks like auto’s before losing growth momentum and now it’s a consumer staples facing growth issue.  Consumer staples don’t have significant weightage on indices as a result not reflected substantial weakness in index.

Moreover, IT after having outperformed in recent times also depicted weakness this week. In addition, market breadth remain a big issue for the market at higher level which is not a good sign and could become a major cause of concern, we should not ignore it. Despite, seeing a major indices at all-time high (because of managed by very few heavy weightage stocks) I have no delectation rather I am cautious. Hence, outlook is not very positive.

Conclusion

Primarily following the NIFTY and its indicators, can result in overlooking problems that exist in the other parts of the market. I am stunned by how sharp a divergence actually exists. There are the negative divergences on the chart on all time frame daily, weekly and monthly. The relentless rally can’t help but cause me to doubt my “lying’ eyes,” but the divergences are there, and we need to be on our guard. Despite, all negative indication market may rally sharply, though temporarily, hence we should be prepared with exit strategy if required.

I welcome any feedback or suggestion you may have about the content of this article.

Be patient..!; Be a Savvy Investor..!!

Pankaj