Weekly Market Recap:
As expected, market this week started off with the follow through from last Friday technical bounce from near early February low, however, that bounce appeared to have dissipated as the week progress. Despite, showing a good set of monthly sales figures on 1st March, Auto stocks didn’t gain much and were mildly in the green. Amid global weakness, Friday holiday elude our market from steep pull back, as SGX NIFTY on Friday was trading at 10270 which was 188 points down from Thursday closing of 10458. So, we can say that festivals not only play a vital role in our lives, but in our economy as well.
In a short week gone by, Sensex saw itself ending the week with a loss of 95.21 points or .28% at 34046.94 and Nifty closed with a loss of 32.7 points or 0.3% at 10458. Almost all the sectors traded with a flat to negative biased.
Current Outlook:
The good news from last week about VIX i.e. below 16 remains to be good, while market breadth (net of advances and declining stocks) not seems to be quite positive but neither too bad to. Why I am mostly concern about these two indicators is because, the VIX gauge the fear or uncertainty and breadth represents the internal strength of the market, and these two not only confined to index stocks or large caps but the whole universe of the stocks. Hence both indicators indicate the overall health of the market which is always important to diagnose.
Moreover, aggressive sectors like financials, industrial, technology and consumer discretionary should be watched out carefully, and so far I am not seeing any further weakness in any of these sectors as a whole except for few stocks and neither the transition from aggressive to defensive sectors is visible, ideally that is good for bulls.
So, I remain to be cautiously optimistic but on selected individual stocks. And we should not forget that the correction we have seen was much awaited, albeit happened unexpectedly fast, hence shaken of confidence is quite obvious.
Conclusion:
While I continue to believe that we are in a bull market, and would like to wait patiently before deciding to accept the change of character of the market from bullish to bearish. The fast correction doesn’t mean that bull is dead, but for sure, he’s a lot weaker and need some time to rest and eat in the form of consolidation.
Two weeks ago I was talking about possibilities from here on and I think V-shape recovery is out of scenario, however whatever possibilities are left we should never forget to keep a stop in place to protect the capital.
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Keep Analyzing..!!, Be a Savvy Investor..!!
Pankaj