Weekly Market Recap
Likewise, last week, market fell rapidly through out the week and had a descent bounce in the end, the same pattern is being witnessed this week as well that’s why I thought to have the same heading as was last week. Once again NIFTY appeared to have found the support at the lower end of trading range which has been the case since past few weeks. NIFTY has been hovering in the wide range of 1000 points since last two months.
In the week gone by the benchmark SENSEX lost 849 points, or 1.7% to close at 49008.5, similarly, NIFTY shed 236 points or 1.61% to settle at 14507. While BANKNIFTY lead the decline with the loss of 2.47%.
Current Outlook
In my last note, I talked about the sign of minor weakness on NIFTY post-closing below 50 SMA (green line) on the chart and this signal worked perfectly. Although, NIFTY recovered sharply on Friday, however, the technical configuration still not looking strong as NIFTY continued to distant itself from its 50 SMA. On the flip side, the NIFTY current closing has acted as a strong buy zone where demand has been quite strong in past two months. We have to see whether the NIFTY shall follow the same suit or drift lower further. Moreover, few large cap stocks appeared to have taken a support at crucial level that goes in favour of bulls.
Furthermore, on the positive side, the industrials bounced off effervescently from their 50 SMA and posted a positive weekly closing in the falling market that suggest institutions or big investors are still gung-ho to buy at lower levels. Although, rise in commodity stocks indicate rising inflation which might not be good in long-term but as of now it’s a strong area of the market and technically looking solid and well poised to gain further. I also talked about the VIX last week which didn’t show up despite NIFTY deteriorated 1000 points from its high. The case has been the same as market makers might be oblivious about the current fall or may buy aggressively at lower levels. However, the reverse could be quite devastating as VIX has enough room to rise until market found a support after a cascading fall.
Having minor to escalating weakness in NIFTY, in addition, trading below the rising blue trend line, but incisive buying interest by big players in selected group of stocks along with falling volatility alluding a flummoxed or conundrum picture before us. It is axiomatic that trader or investor should seek more evidence before taking any serious position at current level as outlook seems to be slightly bewildered.
Conclusion
It’s never a good idea to try and predict contra-trend moves in a strong equity bull market, because the benefit of the doubt always goes with the prevailing trend, but slight deterioration already happened on daily chart. If false moves develop, they have a strong tendency to develop on the downside. That said, several key indexes and indicators have fallen back to levels that have got my attention. These indicators need to hold; otherwise, further downside testing will likely take place. As of now I would suggest wait patiently.
Happy Holi.
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Be Patient…; Be a Savvy Investor..!!
Pankaj