Weekly Market Recap
Likewise last week, major indices continued to post alternate days of gain and loss, though the range was quite narrow. There seems to be tough fight between bulls and bears. As bulls seems to be wobbled in the vicinity of previous peak i.e. around 12000 on NIFTY, similarly bears hasn’t been able pull down the NIFTY below 11800, consequently weekly result was almost flat.
In the week gone by, the benchmark SENSEX closed up 33 points, or .08% at and NIFTY was down by 12 points, or .11% closed at 11895.
Current Outlook
Last week I wrote that NIFTY moved precipitously from 11100 to 12000 which is quite vulnerable in nature and ideally these kind of vertical move ended up with sudden correction unless supported by strong fundamentals like very strong quarterly earnings. Now, earning season is almost over and I haven’t found strong top line except for very few stocks, in fact most of the companies has shown flat or negative change in revenue, however, PAT seems to be higher, that is not in commensurate with increment change in revenue, it is mainly on the back of recently corporate tax cut by the government.
Technical silhouette is ambiguous, though there are myriad of possibilities to be happened from here on, still heuristic view is tenuous. Price action apparently in favour of bulls unless NIFTY close down below the range of at least last to week, while in contrast, despite being made a new high by the major constituent of the NIFTY, index hasn’t been able to touch its previous peak, and that’s a big cause of concern for me. Among all the constituents only 5-6 stocks are enjoying a weightage of more than 50% in NIFTY, again this is sign of extreme vulnerability as slight correction in these stocks may become a reason to cause a ruckus in the market.
Hence, current outlook looks ambiguous and implacable to predict, however, I would certainly digress myself to buy aggressively unless negative divergence on long-term chart get resolved which I have already discussed in my last few blogs.
Conclusion
For most of the week the market (NIFTY) was moving sideway, near previous all-time highs, but the relatively light total volume simply did not express total commitment to the moves. Of course, we make money on the price gains, not volume, but the thin volume could be undermining those gains. Intermediate-term indicators are overbought and are displaying negative divergences. Bottom line, the trend of the market is up, but the condition is overbought. We should expect a pullback soon.
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Be patient..!; Be a Savvy Investor..!!
Pankaj