Weekly Market Recap
The market tumbled this week which was caused by the financials and Adani’s group of stocks. We have witnessed a cascading fall in many weeks that has produced a warning signal in a clamoring fashion.
In the week gone by the benchmark SENSEX fell 1290 points, or 2.19% to close below the 60K mark at 59330, similarly, NIFTY fell 423 points or 2.35% to 17604. While BANKNIFTY had the biggest weekly fall in one year with a loss of over 5%.
Current Outlook
Most importantly NIFTY has broken the double-bottom support decisively which was established recently the last month as shown by the horizontal blue line in the chart. Another indispensable factor is to look at the chart pattern of the past year, the current move is quite similar to the move which occurred in October 2021 when NIFTY made a new high and fell in the same fashion after consolidating in a sideways pattern. The next major support after breaking down was 200-SMA (black line) which is at 17300 in the current scenario. Although NIFTY fell significantly way below the 200-SMA two times followed by a sharp up-move.
It hasn’t been quite uncommon for the NIFTY to have big random moves, despite having wild swings in the past year NIFTY is still emanating a sideways structure. Whether the accumulation or distribution taking place will eventually break out or break down the market; sooner than later. To me, volatility at a higher level suggests a possibility of distribution taking place. Provided the time horizon of distribution much lower target on NIFTY is quite possible unless proven otherwise.
Conclusion
I have written many times in the past that NIFTY is quite vulnerable on a monthly chart and perhaps the time is approaching to resolve that vulnerability. It is quite possible we may see another sharp rally from here which we should use to exit; otherwise, the market has already given us an exit signal.
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Be Patient; Be a Savvy Investor..!!
Pankaj