Weekly Market Recap
The market continued to rise in the second week; though we saw some wild swings in this truncated week yet managed to close at a higher level. It has been a wonderful rally off the lows. In under two weeks, the market seems to have changed its course of action from appearing quite bearish to bullish. This is an incandescent and surprising change.
In the week gone by the benchmark SENSEX climbed 652 points or 1.10% to 59959, similarly, NIFTY surged 210 points or 1.20% to 17786. While BANKNIFTY gained half of percent.
Current Outlook
Technically, NIFTY once again made an attempt to break above the one-year-long channel. This is the third such attempt since August 18, and as of now, SGX NIFTY indicates a gap opening on Monday. Would this break-out be sustainable? If yes, then how far NIFTY can rally? At this juncture, it is hard to anticipate whether the break-out will sustain or not. However, given the technical structure where the NIFTY got reversed from the middle of the channel the probability is quite solid. Provided the pessimism created in the past few weeks while the price remained range bound it is quite possible NIFTY may surpass the previous peak.
On the contrary, the market breadth this week was not strong despite the rise in prices. Ideally, a breakout should be backed by strong market breadth, but ideal conditions are hardly apparent these days. Moreover, the market move opposite to sentiments as a result market may fall sharply once the negative sentiments get alleviated.
Conclusion
The current condition is quite peculiar; the price is rising but the internals is not supporting it. Hence, extra caution is required with the tight stop in long positions.
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Be Patient; Be a Savvy Investor..!!
Pankaj