Weekly market Recap
I concluded the last blog by saying “let see how the market react next week”, perhaps! We got the answer, but not fully. For past few weeks I have been showing my concern on the weakness on financials; specially private lenders, since first time I wrote about negative divergence found on the chart of Banknifty in my blog dated 18th, August which tend to be resolved in downtrend. Finally, month long underneath prevailing weakness transformed into severe correction in broader market this week led by private lenders; especially by housing finance NBFC’s. Stocks like DHFL and Yesbank were down by 43% and 29% respectively in a single session on Friday.
Friday’s mayhem caused a ruckus on the Street, Sensex sinking almost 1100 points at one point before recovered the losses. In the week gone by Sensex lost 1249 points, or 3.28%, Nifty erased 372 points, or 3.23%, and Banknifty lost 1566 points, or 5.77%.
Current Outlook
Whether the correction in financials has culminated or not? Perhaps it has not been answered yet. But I think issue with the VIX remains intact that indicates market may continue to trade with negative biased with sharp moves on both the sides.
Moreover, on weekly chart both Nifty and Banknifty have plenty of room to slide further, though in short term both looks oversold that could invite bounce-off to some extent, but the probability seems to be quite low. Aggressive sectors like financials and autos have entered into the bear market after having a correction of more than 15-20%. This is an expression of the persistent weakness that has been driving the market lower.
It is, however, apposite to note that this weakness may continue in the year ahead. Hence, to deal with exigency, careful selection of sectors and stocks is utmost important.
Conclusion
In last few days, on the back of ambiguity on technical, I had decided not to trade much, except to have few shorting positions in major auto stocks like Maruti and trade turned out to be in my favor. However, I have been asked this week, why I am not doing much? I replied that not doing anything is still your decision of doing something; especially in a market like this.
Anyways, this week the thing that stands out most to me is the rising VIX (volatility Index) that telling us to look for further weakness. Let see how the market react next week.
I welcome any feedback you may have about the content of this article.
Happy trading…! Be a Savvy Investor..!!
Pankaj Saini.