Weekly Market Recap

It was the quite volatile week for the market amidst border tension between India and Pakistan. For most of the week both major Indices, Sensex and Nifty had a wild swing during intraday that oscillated between positive and negative territory. Nevertheless, oscillating range appeared to be innocuous that contained the prices in a narrow width, however, bull dominated the charge in the end on the back of border tension dissipation on late Thursday that resulted into positive closing for the market.

In the week gone by, the benchmark Sensex gained 192 points or .54% to close at 36063, and Nifty added 71 points, or .67% to settle at 10863.

Current Outlook

First and foremost, to note that despite having a prevailing negativity, the recent border unrest didn’t result into much damage to the market. I am considering it as a positive surprise. Is it a signal of big upside move or mere a contrarian move in opposite to negative sentiments?. Well, if I look at the prominent indicator to gauge the market health that is market breadth, was slightly in favour of bulls on cumulative weekly basis. I remember, last week also breadth was slightly positive. No doubt, this is a constructive move for the market that may result into upside, eventually. However, it is not pertinent to merely relying on breadth data that too for only two weeks data, technically, price action should also commensurate in line with other indicators to get the sustained and reliable signal. So far, its look good.

In contrarian to above facts, it is also important to note that nasty decline normally comes when things started appears to be good than bad, but that doesn’t mean decline should come instantly, but possibility to come later and suddenly is always there; especially when valuations are elevated. Top constituents of Nifty 50 stocks are trading above the higher side of their 20 years average valuation. Last time I wrote, the possibility of outperformance by mid-cap and small-caps over large-caps. And, this week mid-caps relatively outperformed the large-caps.

The possibilities are many, but the probability to choose one is not large. Hence, outlook remained indecisive, but slightly positive in short-term.

Conclusion

The market is slightly positive, but vulnerable to corrective action, although that action may be no more than an extended consolidation. However, taking long position in out of Nifty 50 stocks may be a good idea who has announced a good set of earnings and technically hovering at support level. Last but not the least never forget to execute your exit discipline if the doesn’t work.

I welcome any feedback you may have about the content of this article.

Keep Analysing..!; Be a Savvy Investor..!!

Pankaj