Weekly Market Recap
Volatility continued to rule the market amid a tug-of-war between buyer and seller. In yet another quite volatile week, indices had an exceptionally wild swing where both buyer and seller continued to resist, however, the net effective change was nil. On Monday, NIFTY started off with the plunge of over 400 points followed by a solid recovery on Tuesday which again fizzle out by the end of the week.
In the week gone by the benchmark, SENSEX closed flat with the marginal gain of 36 points, or .06% at 58803, whereas, NIFTY lost 3 points, or .02% to close at 17539.
Current Outlook
Last week, I ended on a cautious note and the knee-jerk reaction on Monday was expected, however, the powerful recovery we witnessed the next day was a bit surprising. Unequivocally, the recovery was quixotically furious and tantalizing that left the impression of an impending bull run among traders and investors but nothing much happened thereafter.
However, if we look at the chart the technical picture hasn’t changed much from last week. NIFTY is trading in the channel at the higher end of the range and indicators are still rolling down. Nothing meaningful has occurred except the wild swings. The market breadth remained subdued post recovery suggesting there was a lack of follow-through, besides heavyweights continued to slide including technology which has been the backbone in taking out the indices to an all-time high.
On the positive side, the silver lining is the financials. In the recent recovery, since the NIFTY reversed from the lower end of the range financials have emerged as one of the strongest sectors which continues to allude some strength. I will keep watching the banks for clues, if they also start to roll over down that will be concerning. Hence, the outlook is not very promising for bulls until the above-mentioned conditions reverse.
Conclusion
The price always precedes the news, there has been some positive news on inflation and the economy recently, and by that time NIFTY has already reached the top end of the range. Unless NIFTY makes the turn higher above the channel, we need to remain cautious.