Weekly Market Recap
In line with my expectations, markets continued to fall, and stumbled and struggled to find out the at least near-term bottom. It is arduous to conclude that selling is over, perhaps, not yet.
In the week gone by the benchmark SENSEX lost 720 points, or 1.88% to close at 37576, similarly, NIFTY closed down by 212 points, or 1.9% at 10989, whereas BANKNIFTY underperformed significantly, down by 4.62%.
Current Outlook
Yes Bank, Say Yes to Growth…! this tag line certainly to be vanished now. Well, before this stock price carnage happened especially among financials, I have been persistently writing in my last few blogs that relatively underperformance by financials stocks is not a good sign for the market, specially at a time when their weightage is extremely high in major indices. Nothing much has changed yet.
Technically, I checked my indicators along with price charts in all the time frames and determine how oversold the market is right now. We might think, after this unprecedented quick correction and likely soon-to-be bear market, it’s appears that all the indicators specially on daily charts are stretched out and oversold. However, that isn’t quite the case with long term chart. The VIX (volatility index) at 25.64 is at the higher end of the last 10-year range, but we have seen the reading of 40 plus in 2008 crisis. So that is oversold, but still has a room to spike up further. Market breadth is persistently declining, most importantly large cap banking stocks still looking over-stretched and quite vulnerable to correct sharply on long-term monthly charts.
Ipso facto, outlook continue to be sluggish and vulnerable. Any bounce from the current level could be fallacy and embezzled that may prove to be punitive for buyers.
In the middle of the week I was just wondering about the term globalization as everyone is so scared about coronavirus. And, I googled it few definitions and I would like to add something, globalization doesn’t merely bring the growth of international trade, ideas, and culture, it could also become a cause of pandemic for highly transmittable disease.
Conclusion
The market in short-term very oversold. The problem lies in the longer-term readings, which are not really oversold enough. More long-term damage needs to be done to those indicators before we conclude that selling is over.
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Keep exploring.!; Be a Savvy Investor..!!
Pankaj