Weekly Market Recap:
While it would be great for the stock market to rise everyday without any selling whatsoever, that’s just not practical. A week after record breaking rally, weak global cues, rising crude oil prices and some disappointing earnings number halt the rally during the week gone by on street, as major benchmark indices witnessed a range bound trade except one day fall on Tuesday throughout the week, mostly with sideways bias.
On weekly basis, both the headline indices, BSE Sensex and NSE Nifty lost over 1 per cent. Sensex closed at 33314.56 down by 371 points and Nifty at 10321.75 down by 157 points in past week. The sectors which performed well are Energy, IT and Consumer staples.
The key economic indicator IIP data shows growth slowed in September to 3.8% from a nine-month high of 4.5% in August.
Current Outllook:
Interestingly, what I have found is, energy shares made a huge advance on Monday as money rotated to this once-forgotten sector in a big way. Bull market thrives on broad participation in rallies and energy sector had been one sector not participating. That is no longer the case as all technical sign point to higher prices in this space and this is what’s likely to irritate the bears in the future. We now have another sector that’s technical capable to take on new money as money rotates elsewhere. It’s the beauty of a bull market. Wide participation means a lot of choices. The problems begin when breakdowns occur in several areas and money can’t find a new technical home.
On the surface, it’s always scary to see stock prices decline. That enables all the doom and gloom “experts” to reappear on CNBC or on other news channel to tell everyone to sell stocks now as the “big one” approaches. But they forget to tell that it’s always nice to buy a stock on pull back or in correction amid strong uptrend. Bear markets do not just begin out of the blue. At least that’s not how they’ve started in the past. They take time and they take significant rotation and shifts. They take fear and high volatility. We have little of that right now. Instead, Thursday and Friday was another example of buyers jumping in on every opportunity. Reversals could be seen in almost every corner of the market except few who has posted poor earnings. Smart money continues to buy these dips while the bears once again try to pile on with the first sight of any selling.
However, I have also analyzed, some big stocks are either showing a sign of Re-accumulation or initializing distribution, which has not confirmed yet, but need to be watchful closely for the confirmation. Till then, stay on course.
As I wrote in my previous blog to cover fundamental part of the market in next week, however, again I have to postpone for next week else current blog will become too lengthy, which I want to be as short and precise as possible.
Conclusion:
Things that bother me is not having clarification of re-accumulation or beginning of distribution taking place, but over all I don’t see any major technical problems. Weakness isn’t showing in market action. For example, this week we had a sell of that lasted less than a day and resulted in minuscule losses, and this is typical of what we have seen all this year. However, it’s not going to last forever, so be sure to have an exit strategy planned.
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Be alert….. Be a Savvy investor..!!
Pankaj