Weekly Market Recap

In yet another volatile week, broader indices kept hovering in the vicinity of previous week closing point, although in net the major indices closed with a marginal loss. In the week gone by, the benchmark SENSEX closed down 240 points lower, or .61% at 39058, similarly, NIFTY was down 77 points, or .67% to close at 11583, whereas BANKNIFTY buck the trend and closed with a gain of 275 points.  

Current Outlook

As I wrote last week, the rising stocks are rising with less volume and the same behaviour has been observed this week as well. Most importantly, NIFTY couldn’t cross previous week high as a result head and shoulder pattern which I have been talking about for last few weeks is still intact and valid (see the chart below). Although, provided the momentum is clearly in the favour of bulls which can easily take out the NIFTY above said pattern, not only that NIFTY may rally few hundreds points, however, in the absence of favourable market breadth and volume the rally is getting more vulnerable with each passing day. Nevertheless, broader indices seems to be quite resilient and showing strong buying action at lower levels. However, at the same time market wobbled at higher level as a result the swings are quite wild. The frequent change in price from positive to negative and vice-versa at higher level is not a good sign that indicates few large players are dominating the market. Most likely they are distributing their holdings at optimum higher level. The distribution is quite nasty process unlike accumulation which leads to sharp fall in prices once distribution is over, but this may continue for quite sometime unless you become a confident buyer in the market.

 

Fundamentally, the top line is not growing with the same pace as net profit is, courtesy to government for reduction in taxes. Technically, I think price is crowding the top of a broadening top formation, but its seems difficult to protagonist when the price is going to get reverse. Hence, the current outlook appears to be neutral with a room to change in either direction.

Conclusion

Next week, I think the market will decide the course of direction, I continue to think we are in topping process. While the market is at close to highs, many internal readings are lower than at previous top this year, and the declining volume showed a lack of commitment for upward push. If price continues higher next week without an appropriate expansion of volume, I am not a buyer.

 

Feedback, comments, suggestion or questions are welcome at below comment section or at [email protected].

 

Wish You all a very Happy Diwali..!!

 

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

 

Pankaj