Weekly Market Recap
It was quite a volatile week for the market. The NIFTY started the week with the torrential fall; however, it got reversed sharply the next day and managed to recoup all its losses in a single day. The rest of the week NIFTY hovered sideways to the downside eventually ended the week with a mild loss.
In the week gone by the benchmark SENSEX closed down by 319 points, or .55% at 57832, similarly, NIFTY shed 98 points, or .57% to settle at 17276. While BANKNIFTY had serious damage and lost over 2%.
Current Outlook
There has been a tug-of-war between buyer and seller for quite some time. As buyers become aggressive at the lower level, sellers are quite active at a higher level. That has resulted in a range-bound condition with wild swings. The good news is, so far, the low on NIFTY has been in the same range at the blue horizontal line; except one time in December penetrated below that level to 16400, see the chart below. And most importantly, this support is maintained despite so much negativity, perhaps patience is being tested.
And the bad news is NIFTY is persistently making a lower-tops (red line) which is taking a shape of a descending triangle that is most likely to resolve in a downtrend but not guaranteed. Falling below the triangle may invite the knee-jerk reaction or selling may intensify, unless it happens the scenario would remain range-bound. The base of the triangle i.e., the blue horizontal line is coinciding with 200-SMA (black line), hence it is the crucial support for the NIFTY.
Furthermore, the BANKNIFTY which had been holding up well until last week is getting weaker and leading to the decline that is the big cause of concern. Last week, I wrote that the bullish technical configuration among many momentum stocks is turning into a bearish outcome that is quite untoward for the overall market.
Conclusion
I think, provided the ambiguity the indices may remain sideways for quite some time. Therefore, the exposure should be minimum even shorting is not prudent at the support zone.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj