Happy Diwali to All
Weekly Market Recap
Last week, indices rallied considerably well from the key support level, and with that push the NIFTY rallied to the key resistance level. And NIFTY kept hovering around the resistance throughout this week in a narrow range.
In the week gone by the benchmark SENSEX gained 540 points, or .84% to close at 64904, similarly, NIFTY added 194 points, or 1% to close at 19425. BANKNIFTY also moved in tandem with the benchmark and gained over 1%.
Current Outlook
Of note on the chart below is that in the recent past, the NIFTY corrected up to the level from where a sharp rally began in early July to a new all-time high which has acted as good support (green horizontal line) so far. The bounce in the past two weeks is propelling the market to gain further. However, it looks like NIFTY may have to struggle to pass through that level as the same level has acted as good support in early October. So, it is a support turned into a resistance barrier that makes this level so meaningful.
I am definitely watching this level very closely. The most bullish thing the market can do is to give a solid breakout and go up. And left us all to debate on potentially bearish macroeconomic factors, such as elevated interest rates, state election outcome next month, and an escalating situation in the Middle East. And the market may continue to do otherwise. I would say that the possibility of this event is quite likely.
However, if a breakout occurs it is important to consider the broader participation and leadership in order to avoid the false breakout. Though the market at the current level is fairly distributed to rise or fall, provided the resilience in the past two weeks I can expect the new swing on the higher side. But again, the confirmation is a must, and if the market is bullish the subsequent pullback should not eclipse the previous low.
Conclusion
I have presented the best possible scenario for the bulls above. But we should be prepared for the retest of the recent low and if NIFTY fell below that low the downside objective could end up being much, much lower. So, expect the best and prepare for the worst.
Feedback, comments, suggestions, or questions are welcome in the below comment section or at [email protected].
Be Disciplined; Be a Savvy Investor..!!
Pankaj