Weekly Market Recap
Since last 2 weeks I asserted that market was in the process of forming a double top, in fact last week action seems to had confirmed the double top. However, this week on Friday, market bounced-off sharply before the exit poll hit the tickers on Sunday, perhaps in the anticipation of NDA government returning to power. Let’s see what happens on 23rd may. Intentionally, I am writing this blog before looking at exit poll on Sunday evening in order to not get biased with my analysis.
In the quite volatile week gone by, the benchmark SENSEX gained 537 points, or 1.44% to settle at 37930, and NIFTY surged 150 points, or 1.33% to close at 11407.
Current Outlook
Though, election outcome may abruptly drive the prices in either direction that could cause the ruckus at least for a time being. However, I do believe that despite having a positive election outcome upside would be limited and may not prolong much except for few days. Friday rally was again not backed up by strong market breadth, though it was slightly positive on the back of short covering before the big macro event.
Technically, the sharp correction we have been witnessing in last one and half years indicates the change of character of a decade long bull market which started in the year 2009 after a plunge in the year 2008. Moreover, technical conditions that we had in 2014 when NDA came in power with majority was totally different from current situation. NIFTY had consolidated for quite long time, since year 2010 to early 2014 to enjoy the advent of unprecedented stupendous rally. This time technical setup are not as strong as we had in 2014. In addition, earning season is going on, and very few stocks are being rewarded post results, but more has been punished.
Therefore, current configuration is not very lucrative for the bulls, still there is some room for upside post recent correction. Hence, current outlook is demanding attention.
Conclusion
On Friday, the prices bounced, hinting that may be decline is over; however, the rally was not followed by above average volume, and I give that a lot of weight. Last but not the least, we should not anticipate much about such a big macro event rather keep your positions light and be ready with your exit strategy.
I welcome any feedback or suggestion you may have about the content of this article.
Be patient..!; Ba a Savvy Investor..!!
Pankaj