Weekly Market Recap
In my last weekly note, I wrote about the possibility false breakout and this week’s market action veritably approved that. This week started off with selling pressure which only gets intensified in the middle till the end as a result indices closed at the lowest point of the range. Most importantly we could see any sign of bounce or a relief rally.
In the week gone by the benchmark SENSEX lost 1538 points, or 2.52% to close at 59463, similarly, NIFTY shed 478 points, or 2.67% to close at 17465. While BANKNIFTY led the decline with the loss of 3%.
Current Outlook
The dominant feature on the chart is NIFTY has fallen close to 200-day SMA (black line). Since crossing above the 200-day SMA in July NIFTY fell back to that level in September which acted as a pretty good support thereafter NIFTY reached to new high. There is fair probability NIFTY may again take a support or consolidate at this level like in recent past, but this time there are many internal factors which might cause to break that strong support.
One major factor is the persistently weak market breadth and a surge in downside momentum. Exceptional weakness among banking stocks is again a cause of concern amid high inflation which indicates the impending weakness in the economy. Technically, if NIFTY breaks below 200-day SMA it will further escalate the selling as “nothing good happens below 200-day”. This is one of the barometer to recognise the trend of the stocks, we are more likely to experience the sustained advance once the price is above 200-day SMA. I was consider this support as the last line of defence for buyers failing to hold that support may invite deep correction.
Conclusion
While a handful group of stocks remain on solid footing, I’m concerned by the fact that some of the most important charts especially from banking sectors are exhibiting a fresh sign of weakness. Hence, the buyer needs to be extra careful and watchful of the support.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj