Weekly Market Recap
In the continuation of last week’s selling pressure, the week started off with fresh selling on Monday but soon managed to recover and hovered in the vicinity of last week’s lows for a couple of days. And as expected some sort of relief rally came in thereafter, but it couldn’t sustain as most of the gain was renounced on Friday.
In the week gone by the benchmark, SENSEX recovered 580 points, or 1.03% to close at 57696, similarly, NIFTY gained 170 points, or 1% to close at 17196. While BANKNIFTY continued to be under pressure and gained less than half of the percentage.
Current Outlook
On Monday, when the market opened lower the NIFTY appeared to be oversold as most of the prominent indicators have recorded their lowest reading in the past year which is usually a good indicator to expect some bounce. As evident in this week’s chart, a deep reading like this is a good indication of an oversold condition. But just knowing that the market is oversold is not enough. The market can always get more oversold if it wants to. And even when an oversold low does matter, it may not be the final word. There can be a relief bounce, followed by even more selling. It would be nice if the market would serve up nice clean answers all the time, but that is not the market we get to play in. However, somewhere we have to mark an exhaustive bottom for the stock prices.
Consequently, the oversold conditions were followed by a decent bounce, however, the way gradual selling occurred on Friday doesn’t seem to be propitious that indicating the distribution is happening at a higher level. It is most likely that this week’s low and high could act as strong support and resistance in the near term, though given configuration biased to bears. And as I mentioned in my last note that the rallies should be used to exit rather than buy.
One scenario which I am expecting is the market may remain sideways for the next two months followed by even more selling. Hence, until this week’s low is holding up the near-term outlook may be sideways with short rallies.
Conclusion
After a nasty drop, several indicators are showing up signs of bottoming. So far, these indications are tentative. The possibility of turnaround is always there whether the worst is over or not, only time will tell. Hence, it’s a time to wait patiently and analyze the nuances of the market profoundly.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj