Weekly Market Recap

Last week, I wrote that I wouldn’t be surprised if market failed to hold the support of recent lows made a week ago and this week market action was so severe, but it didn’t surprise me.

In the week gone by, the benchmark Sensex lost 966 points or 2.83% to close at 33349, and Nifty lost 273 points or 2.65% to settle at 10030, barely up from psychological crucial mark of 10000.

Current Outlook  & “Analysing current state of the market”

Yet again, the two prominent indicators to me, VIX (Volatility Index) which gauge the complacency and fear; and market breadth which measure the overall health of the market, both are quite alarming. Normally, I don’t show the weekly and monthly charts in my weekly blog because they take time to demonstrate a progressive and destructive move, although, I always take them in my analysis, especially, when VIX is above 16, now at 19.23.

We can see in the Nifty weekly chart below that the cyclical bull market trend line drawn from the February 2016 low has already been decisively broken, which should had been act as a support. After breaking down below recent low at 10150, the next temporary support we can expect at march 2018 low at 9959, if that fails to happen then I think next horizontal support would be at 9000 that level had act as a resistance 2 times before, now should act as a strong support that also coincide with 200 week SMA (simple moving average), it’s a zone of multiple support. However, it is not going to be happen in straight line, provided down side moment we are seeing, we cannot rule out unprecedent move like this.

Two weeks ago, I wrote that I have not seen any area of pocket where money is rotating, in fact I did emphasise that IT stocks may correct more in future; as despite, appreciation in dollar ($) against Rupee, IT stocks had not commensurate with the trend, eventually they have fallen more than 5-10% or more in last 2 weeks.

I have lot to write, but to make my blog short and precise would share my thoughts next week.

Conclusion

Last week, I wanted to say that bear market has arrived, but I was waiting for march 2018 low to be tested and broken, I think that level will be broken next week; however, I think bear market has already been arrived as the large cap stocks belong to aggressive sectors are down by more than 20-30%, few mid-caps are down by 50-60%. The cyclical bull market rising trend line is a huge piece of negative evidence.

There are many indicators becoming oversold, but in bear market, oversold is more likely to be an indication of subsidence than it is of compression that will fuel a rally.

Feedback, comment or questions are welcome.

Always be a Learner; Be a savvy Investor..!!

Pankaj Saini