Weekly Market Recap
Market remained buoyant and continued to rise toward new highs, very much in line with my expectation. Although, the minor gap-down opening down to the previous high was being seen on NIFTY at the mid-week which acted as a strong support, consequently the recovery came in and NIFTY rebounded smoothly on the same day, subsequently scaled up to new highs until the week concluded.
In the week gone by the benchmark SENSEX gained 677 points, or 1.32% to close at 52100, and NIFTY added 234 points, or 1.52% to settle at fresh high at 15670. While BANKNIFTY again appeared to be laggard with a succinct gain of .43%.
Current Outlook
Based on the technical configuration, particularly, since past three week I have been expecting the NIFTY to move higher and I have briefly mentioned the reason for the same in my blogs based on my analysis. Thus far, nothing significantly has changed as far as price action on technical set up is concerned and suggesting trend is quite intact which may take the prices higher. However, I have noticed minor changes among technical indicators, especially when I combinedly analyse them on daily, weekly, and monthly charts. Firstly, in a short-term on daily chart, few indicators are suggesting a bit over-stretch or over-bought condition which is not necessarily be the reason for reversal, but some caution is required. As upside momentum seems to have waned to some extent along with decline in volume while prices moving higher.
In contrast, as I mentioned earlier the VIX is continued to drift lower and market breadth is still quite strong which is bullish.
However, on weekly chart, the negative divergences among indicators have once again become more pronounced that can invite some correction unless resolved otherwise. Moreover, the price has deviated significantly above from the moving averages in all the time frames which needs to be resolved by either sideways action or some sort of pull back, hence caution is warranted.
Most importantly, some perplexity is being witnessed among financial stocks, very few are rising feverishly while others are scrambling to gain the momentum. There is an embezzlement going on which is untoward and not propitious that needs to be taken into consideration gravely.
Amid ambiguity and bifurcation, the previous February high on NIFTY around 15450 would be the crucial watch out level. As long as, NIFTY managed to hold above that level the trend would be impervious, so as the outlook.
Conclusion
The trend remains quite strong and VIX looks bullish, nevertheless, above mentioned observation may be the cause of concerned. However, some future context could dwarf these observations and obviate its significance that can lead the prices higher. Hence, stay long but with tight stop.
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Keep Analysing…; Be a Savvy Investor..!!
Pankaj