Weekly Market Recap
Last week, I mentioned that market participation is getting weaker, and I wouldn’t be surprised if we see a level of 15800 on NIFTY. This week market started off with a nasty decline followed by some relieved action till Thursday only to rattle and tumble again on Friday, posted the biggest one-day fall since the rally started off after the pandemic low.
In the week gone by the benchmark, SENSEX plunged 2528 points, or 4.25% to settle at 57107, similarly, NIFTY vanished 738 points, or 4.16% to close at 17026. While BANKNIFY, which has been leading the decline fell one notch extra i.e., 5.14%.
Current Outlook
Firstly, I would say the market was quite generous this time as it gave us a decent signal and an ample opportunity to exit. Since the market participation was persistently getting weaker when NIFTY was at around 18K and that weakness was averred when NIFTY breakdown below the 50-day SMA as we can see in the chart below.
The VIX which was hovering at the lower end of the range has spiked up, but still has room to escalate further. The next strong support on the charts appears to be at 16K which is the 200-day SMA that is coinciding with 50-day SMA on the weekly chart means NIFTY may fall another thousand points before it gets stabilized. Though we may see some bounce in the next few days, I think we should use it to exit rather than ponder to buy more. Bulls could make brief counterattacks, but it seems hard for them to get their act together to take charge in the near term.
Financials seem to be the real culprit behind this fall, and I think they would continue to be the market dragger unless the equation changed going further and provided their weightage, they will continue to weigh the indices. Hence, the outlook seems to be gloomy.
Conclusion
The existence of the current fall in the top chart does not tell us precisely how bad things might get, nor how long the unpleasantness may last. It is just saying that, right now, the bulls do not have their act together, and we should expect the rocket to fall back to earth in the weeks to come as correction seems quite trivial on the monthly chart.
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Be Patient; Be a Savvy Investor..!!
Pankaj