Weekly Market Recap

Well, broader market continued to drift lower this week in line with my expectation as I explained in my previous weekly note.  On Friday, we witnessed a biggest one day fall in last nine months and all indices closed almost at the lowest point without making any attempt to bounce off the lows. In the week gone by, the benchmark SENSEX lost 399 points, or 1.03% to settled at 38337, similarly, NIFTY was down by 133 points, or 1.15% and closed at 11419, whereas BANKNIFTY underperform the overall market and lost 2.72%, or 831 points.

Current Outlook

In my last blog, I brought in 2 charts, weekly and daily both were suggesting the downfall on NIFTY as I explained in short (refer my last blog). First and foremost, to gauge the strength of the market especially in earning season is just observe the stock reaction post their earnings and it is quite apparent that stocks are being punished harder on earning misses than being rewarded after meeting the earning expectations. In my last few notes, I have mentioned that along with some technical issues like negative divergences or loss of momentum on price, market is trading at historically higher valuations specially major indices and very few stocks have been dominating the indices for quite some time that’s a very alarming or devastating situation. When very few stocks keeps moving higher then their weightage in Index also moves higher and slight disappointment on their earnings is sufficient to create a ruckus in the market as index plunge substantially with minor correction in their high weightage stocks like we saw on last Friday.

Technically enough damage is done to change the existing 10 year long-term uptrend into downtrend. Fundamentally, the valuation is quite expensive and combining effect makes the outlook bleak.

Conclusion

The market has started to drift lower, last two week movement indicates market is poised to fall further. Technical indicators have enough room to fall further before they become over-sold. So a hefty decline can take place in coming days or week and it could get gravely devastating if NIFTY falls below 11000.

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

Stay alert..!; Be a Savvy Investor..!!

Pankaj