Weekly Market Recap
In my last blog, I concluded with the note of caution…! and expected the market to reverse based on given technical configuration. Though, as expected, the week started off with weakness but concluded with exuberance and made it another strong week.
In the gone by the benchmark SENSEX surged 950 points, or 2.81% to close at 34731, similarly, NIFTY gained 271 points, or 2.72% and settled at 10244.
Current Outlook
The stock of the week was heavy weight Reliance which had a stellar run of over 10% this week. In fact, I have been waiting and expecting this kind of move, since the news regarding the funds raising had been resonating every next day. I think, the cycle of raising the funds seems to be over now, so as the rally in stocks is quite overdone for time being. With the surge in price the weightage of Reliance in index has increased tremendously as a result its movement will have a strong repercussion and lopsided effect on the indices.
Last week, I enunciated the weekly chart where hanging man candle was formed which indicate trend reversal or the top of that candle will act as a strong resistance at least in near future. This week NIFTY closed almost at the high without losing any gain, however, it couldn’t close above the previous week high, despite being solid support provided by the heavy weight Reliance. It has to be noted gravely. Moreover, the previous week top is coincided with 200 weekly SMA (black line) as can be seen in the chart below. It could prove to be a peril point for the NIFTY unless its decisively break and close above that level. Although, there are no shortage of possibilities but unless it doesn’t happen, I think NIFTY may ebb off from here.
Hence, coming week is quite important to decide the next course of run for the NIFTY. Meanwhile, we can say outlook is at the edge of chaos with negative biased, but with preparedness to look for buying opportunities in individual stocks if breakout happens evidently.
Conclusion
When the complexity arises, we see the violation of rules or whipsaw signal are quite evident. Sometimes the whipsaw signal or false breakout are warning sign for another boisterous movement, however, at the same time they just turned out to be a mere platitude. It is, however, prudent to wait patiently before we rush to take any position.
Feedback, comments, suggestion or questions are welcome at below comment section or at [email protected].
Be Patient…!; Be a Savvy Investor..!!
Pankaj