Market Rallied Precipitously..!!

Dec 2, 2018 | Strategy

Weekly Market Recap

This week market rallied precipitously, opposite to my expectation and ended the week on a strong note. Perhaps, the rally was driven by short covering in expiry week as market rallied till Thursday (expiry day), but was almost flat on Friday.

The benchmark Index, Sensex has ended the week with a net gain of whopping 1213 points, or 3.47% to settle at 36194. Similarly, Nifty added the 350 points, or 3.32% and closed at 10876.

Current outlook

Whether the market rally is driven by short covering or due to improvement in macro factors like plunging crude oil prices. I think, former has higher attribute as a result the rally may fizzle out in a week or two. If the later is the case then market has huge upside potential to recoup all the losses and eventually we may see the new all time high sooner than later. Whatever be the case is, the current upside momentum is undeniably strong enough to take the Nifty above 11k mark or above. Market has the ability to stretch in unusual market conditions and I would say this is one of those times.

However, I fathom the depth of the market and don’t found any veritable improvement in the overall health of the market. Despite, seeing a gigantic move on indices, market breadth is persistently weak, ideally that shouldn’t be the case. While, VIX can remain elevated on account of election outcome of 4 state legislative assembly on 11th. Moreover, the rising angle of ascent suggest me that there could be some degree of imposition in this rally. Hence, I think we should wait patiently and let the market elucidate the next course of action.

Conclusion

I continue to believe that we have entered a bear market; however, recent price action has certainly been encouraging for the bulls. The upside momentum is quite strong, but the short-term indicators are becoming overbought soon. Although, the short-term trader can buy the momentum, but with selling discipline.

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

Invest patiently..!; Be a Savvy Investor..!!

Pankaj