Weekly Market Recap
In my last weekly note, I expected the market to do well this week especially for few selected individual stocks, although market started-off well, but wobbled soon after and couldn’t hold up the gains. Finally, after having a marvellous more than thousand-point rally in past two weeks NIFTY closed below the 10K mark, however, it could have ended up with severe downfall if buy buyers didn’t emerge late Friday.
In the week gone by the benchmark SENSEX lost 506 points, or 1.48% to close at 33780, similarly, NIFTY was down by 169 points, or 1.67% to settle below the 10K mark at 9972.
Current Outlook
Well, as I have written earlier, the bear market rally are full of shenanigans and embezzlement, and blow-off kind of rally normally get vanished before you realised or get out of it, so it needs to be dealt with perspicaciously. It looks like rally seems to be over. However, the distribution at higher level is a tangled and nasty process where the market looks like to break the resistance and goes to make a higher high to cajole the investors, but, in fact, the smart money or institution invoke that rally to get out of the stocks at optimum higher level. Furthermore, markets are nothing more or less than people in action, and people can and do change their minds frequently. Hence, it’s not unreasonable for markets to do the same thing. And, recent week behaviour is perfect example of this action.
Technically, the time has come to pay profound attention on weekly chart which is enunciating a better outlook. It is ostensible that rally stopped precisely below the 200-week moving average (black line) see the chart below. Moreover, the recent red candle formed is called hanging man which indicates a reversal and the top of that candles should act as strong resistance in near future.
Fundamentally, the real financial shenanigans are happening beneath the surface. The earning season is about to end, and I am surprised to see that some companies have shown higher or tantamount sales volume corresponding to last quarter, but their profit has declined drastically. It is indispensable to note that lockdown period came into force only after 22nd march and the current earnings are demonstrating the financial conditions of Jan-mar quarter. It is conundrum to understand that these companies have managed to attain the same or higher volume, but not profit. Though, I haven’t got into the depth of this analysis, but I guess they used this time to cover it up.
Hence, the outlook which appears to be ameliorated last week, again started to deteriorate.
Conclusion
It may seem silly to frequently change the view from bullish (last week) to bearish. However, this is one of those time when uncertainty is ruling and like I said above it is not unreasonable for the markets to change the course of action like the people do quite frequently. I would like to conclude by saying its time to be on high alert be cautious.
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Be Safe and Stay Alert…!, Be a Savvy Investor..!!
Pankaj