Weekly Market Recap

In yet another week of sideways movement, major indices kept hovering in a narrow range without making any significant headway. While NIFTY continued to resist in its important double top resistance zone and taking gap up support in the range of 11600-11700.

In the week gone by, the benchmark SENSEX finished the week with a gain of 200 points, or .51% at 39394, and NIFTY ended up with a gain of 64 points, or .55% to closed at 11788.

Current Outlook

It seems market is waiting for some event that will determine the next course of substantial movement and the major event in coming week is the Union Budget that has been an overhyped event this time and is likely to remain a non-event to greater extent. However, this event has a tendency to cause a lot of volatility in the market in the form of wild swing in either side. We can expect a quite start to the week, but the big movement is not far away. What the market will do next may depends on the target of fiscal discipline in the Union Budget speech and the progress in monsoon, but my guess is that nothing substantive will be announced in the Budget. However, price action in PSU banks this week is indicating some announcement pertaining to them.

The dominant feature in the weekly and monthly chart is negative divergence with the indicators that normally resolve after a pullback in price, but not guaranteed. The fundamental issue weighing on the market is high valuations, especially NIFTY with a P/E of 28.98. we can’t necessarily time technical decisions based upon this, but this issues must be considered as an important backdrop. Hence, outlook is still not very positive.

Conclusion

Technically, the market appears to be poised to move substantially on either side, perhaps it will be cleared next week. Taking long position in some of the selected PSU banks is recommended, but with caution.

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

Happy Investing..!; Be a SAVVY Investor..!!

Pankaj