Weekly Market Recap
In my last blog, I wrote that the probability of further corrective action is quite likely provided the then technical configuration, and in the past two weeks we have seen significant progress in corrective action amid choppiness. Although there was a decent bounce from the last week’s low and gradually indices drifted lower again.
In the week gone by the benchmark SENSEX lost 398 points, or .61% to close at 65322 and NIFTY shed 88 points, or .45% to settle at 19428. While BANKNFITY led the decline with a loss of over 1.5%.
Current Outlook
The deterioration of upside momentum is quite evident, in fact, the downside momentum may get the pace if the last week’s low on NIFTY is broken. The large-cap stocks that pushed the market higher in the past few months seem to have taken a back seat. After IT, now financials are seeming to have lost their strength too. There is no way for the indices to perform better in the absence of IT and financials as they contribute more than 50% of the total weightage.
Three weeks ago, NIFTY reversed sharply from the brink of the 20K mark and formed the shooting star or reversal island candle which has been followed by corrective action in three successive weeks making it a case of buying climax in NIFTY at around 20K that occurred in euphoria. At the same time, the indicators in the lower panel are rolling down after posting higher readings or upper range which is further supported by quite low reading in VIX.
Keeping aside the rest of the other things like earnings, growth, inflation, monetary policy or etc… I think the present configuration is well suited for a decent correction or the correction of some magnitude.
Conclusion
I think, perhaps, the market has demonstrated clear evidence of being in a distribution phase this suggests that sellers are active at a higher level and refrain themselves at low prices, but the selling pressure may intensify if prices continue to drift lower. Hence, I can say that the markets are in corrective mode and ready to plunge, so be careful.
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Be Disciplined; Be a Savvy Investor..!!
Pankaj