Weekly Market Recap
Finally, we saw a pause after three consecutive weeks of the solid rally. NIFTY rosed lopsided and precipitously 700 points after the breakout occurred above 15900. The week started off higher but closed at the lower end of the range. Moreover, looks like a lot has happened, however, nothing has changed drastically as far as major indices are concerned.
In the week gone by the benchmark, SENSEX corrected merely 107 points, or .19% to close at 55329. And, NIFTY lost only 78 points, or .48% to settle at 16450. While BANKNIFTY led the fall with the decline of over 3% which seems to be a great cause of concern.
Current Outlook
The bank index which has been the weakest spot in the market for quite some time continues to be wobbled and floundered. Metals and industrials, after an astonishing performance, corrected sharply on Friday followed by autos, while consumer and FMCG stocks bucked the downtrend and supported the index. And technology remains the strongest among all.
Technically, NIFTY is at an important inflection point as we can see in the chart below it took support precisely at the breakout level which is the upper end of the rectangular formation. As this has been the case for a while, NIFTY is consolidating in the same rectangular fashion before the breakout, however, unlike in past this time it has come back quickly at the breakout zone which is an important inflection point or should act as strong support. Penetrating below that level may cause further weakness which can draw down the NIFTY to the previous breakout level at 15900.
We need to see whether the gap-down opening on Friday is the downside initiation climax or short-term selling climax. I think, if NIFTY bounce-off a bit and then breaks below 16400 it could be the case of downside initiation climax which can further lead to the decline. Or it can take support here and rally further.
However, the market breadth which has been getting my attention for quite some time is persistently deteriorating, not in favor of bulls. Hence, given the ambiguity outlook seems to be perplexing with slightly negatively biased.
Conclusion
Whether we have a new upside exhaustion climax or a downside initiation climax it would be clear in the coming week. The market breadth is a strong indication of the internal weakness of the market which cannot be ignored. Hence, utmost caution and patience are required at this juncture. Be alert.
Feedback, comments, suggestion, or questions are welcome at the below comment section or at [email protected].
Be Patient…; Be a Savvy Investor..!!
Pankaj