Weekly Market Recap
Last week, I talked about pivot level, particularly on NIFTY. And, this week NIFTY got reversed precisely from that level although the market opened higher on Monday but couldn’t sustain and shed all its last week gain. Not to mention, it became a case of a false breakout, technically which is pernicious in nature for the stock prices as we have witnessed recently.
In the week gone by the benchmark, SENSEX plunged 1774, or 3% to close at 57011, similarly, NIFTY also fell 3%, or 526 points, and settled below the 17K mark at 16985. while BANKNIFTY once again led the decline and fell 4%.
Current Outlook
First, the most evident pattern on the below chart is false breakout which is often followed by above-average price trends in the opposite direction of the original signal. We have many classic examples that appeared in the past including the recent one, where the temporary joint upside breakout was followed by a nasty decline. The second important noticeable thing is the way indicators are behaving in the lower panel. Almost all the prominent indicators which appeared to have bounced off from the lower level last week, have again rolled down from the middle of their range instead of higher level. In the classic downtrend indicators normally hovered in between lower to middle level in contrast to the middle to higher in an uptrend. And it is quite apparent that they have enough room to fall before they reach the lower level, which means the price may continue to decline next week.
Surprisingly, I have noticed the consumer-oriented stocks across the sectors including FMCG are falling below the rising trendline on the long-term weekly chart that seems perplexing, but this is not propitious for the bulls. The growth barely reached the pre-covid level, but the inflation and stock prices are way up, any negative surprise at this juncture could be disconcerting and may invite a sharp pullback. I think the fall in the consumer stocks has already sensed something untoward which is not good news.
Though I have a lot to share, the above-mentioned conditions are enough to be cautious. Hence, the outlook doesn’t seem to be promising for the bulls.
Conclusion
If the above-mentioned conditions get invalid or there is vicissitude in the technical configuration in the coming week then I can reconsider going long, however, as of now it is better to find the shorting opportunities or wait patiently.
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Be Patient; Be a Savvy Investor..!!
Pankaj