Weekly Market Recap
After having a roller-coaster ride in the last couple of weeks, NIFTY made another attempt to break above the one-year-long trading channel, however, once again the rally stalled precisely at the top end of the channel. But the market ended the week with a strong rally which occurred despite the absence of any positive news.
In the week gone by the benchmark, SENSEX gained 989 points, or 1.68% to close at 59793, similarly, NIFTY added 292 points or 1.68% settled at 17833. While BANKNIFTY continued to outpace the rest of the market with a gain of 2.52%.
Current Outlook
Financials, clear-cut have been the leader in recent times; particularly in the rally which started off from the lower end of the range. On Friday, the most shorted stocks particularly IT posted gains that far outpaced the broader market. While it’s unclear where the markets will head from here, it’s critical to note that technology stocks that have undergone a significant correction for quite some time are demonstrating a buying interest at a lower level. If they continue to rise, NIFTY can easily and smoothly break above the channel as the combined weightage of IT and financial stocks are around 50%.
Furthermore, the technical configuration beneath the surface has changed positively, the indicators are no longer in the over-bought zone and have enough room to rise further until the over-bought condition develops. The VIX chart is not showing any sign of fear in the near term and looks like it may remain low in forthcoming weeks which is positive for the stocks.
Conclusion
NIFTY is at the edge of a turning point that can move sharply on either side, it’s critical we have a strategy as market conditions unfold. At this moment, we can anticipate a bit more upside into next week, however, we need to keep our stops tight, as we have seen the market reverse quickly from short-squeeze rallies such as in January and April.
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Be Patient; Be a Savvy Investor..!!
Pankaj