Weekly Market Recap:
December began with a huge selloff and till Wednesday, it’s been mostly down action. Thursday was the first day this month that the bulls could celebrate and feel good and the buying was continued till Friday closing. Financials, Auto, FMCG, Energy and pharma were the sectors leading the charge. However, no news from RBI in its fifth bimonthly monetary policy meet on Wednesday.
So while the NSE Nifty closed with modest gain of 1.42% or 143.85 points at 10265.65, Similarly, BSE Sensex gained 1.27% or 417.36 points before closed at 33250.3 in the week gone by.
Current Outlook:
Last week I wrote about positive correlation between Crude oil and volatility Indes(VIX) both surged in tandem with each other. This week, while crude oil is down by only 1.71% whereas, VIX is down by 16.19% more than last week gain of 15%. To me falling VIX is a sign of complacency opposite to uncertainty; this is what bulls required to resume its previous uptrend. So technically what has happened is market has relieved the extended over bought conditions quickly last week, and there is now plenty of room internally to accommodate more rally as it can be seen in the chart below.
However, it can also be seen that upward progress may encounter some headwinds as there is two overhead resistances at 10400 and at 10500.
Conclusion:
As market is at the middle of support and resistance levels it is more likely that the market may remain in this range for some more time before giving significant breakout, however, individual stocks are breaking out or in the process of bottoming out. Hence I would suggest to focus on individual stocks from a risk-reward point of view and don’t forget to keep a stop in place before taking any position.
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Plan your trade/investment..! Be a Savvy investor..!!
Pankaj