Weekly Market Recap
It was quite a week for the market. Nifty had a rollercoaster ride; in a same day it crossed above 12000 mark and fell back to below 11700 and posted a biggest one day fall in last two months. It happened on weekly F&O expiry day Thursday, although the pull-back was restrained to some extent in following day when NIFTT recoup some of its losses. Pull back was largely led by heavy weights and best performing technology stocks.
In the week gone by, the benchmark SENSEX lost 526 points, or 1.30% to close at 39982, similarly, NIFTY shed 151 points, or 1.27% and settled at 11762. The good news is BANKNIFTY fell 1.3% in line with major indices unlike until last penultimate week when it was leading the pull back that shows resilience is returning to the major sector.
Current Outlook
In my last weekly note, I expected outlook to be positive in foreseeable future, but expressed my concern about the disconcerting precipitous move, ideally which is not sustainable. I think as expected NIFTY has posted a healthy correction up to the major support zone closer to 11600 which is also mentioned last week. If NIFTY stays above that level, there is a good chance it can cross its previous high.
Even though NIFTY had a gigantic fall on Thursday, but VIX didn’t show any sign of peril as it remained in the range that downplay the one-day fall. That suggest smart money is oblivious and there is complacency beneath the surface which is bullish in nature. Although, market breadth was weak in last two day, but the number of stocks making new highs are more than those making new lows, again it’s a sign of strength. Most importantly, industrials are making a come back after a pause for a month that enunciate the recovery in the economy which I also discussed last week.
On the other hand, technology appears to have stretched a lot on charts and need some pause or correction for few weeks to months. However, industrial and consumer stocks are indicating a next leg of rally and providing a descent entry. In short, I expect the outlook to be positive unless NIFTY break below 11600 mark.
Conclusion
Though, sharp pull back always come unheralded, however, rule-based trading always helps you to not get trapped at higher level. Like NIFTY had a tantalizing rally in past two weeks, but technically it was not a great entry if you have had missed the ride and as I always says be patient; this week it paid well with descent entry. I would still suggest to be stock specific where money rotation is happening like industrial and consumer stocks but with strong selling discipline.
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Be patient…; Be a Savvy Investor..!!
Pankaj