Weekly Market Recap
It was quite a week for the market. Looks like a lot has happened this week as NIFTY bounced off nicely from last week’s low up to the middle of the range, however, the upside momentum tends to get atrophy by the end of the week as a result the week turned out to be inconsequential with the marginal changes among the indices.
In the week gone by the benchmark SENSEX closed almost flat with the minor of 62 points, or .0% at 64886, similarly, NIFTY lost 44 points, or .23% to close at 19265. While BANKNIFTY showed some resilience with a gain of .87%.
Current Outlook
In my last note, I mentioned that the deterioration of upside momentum is quite evident, and the downside momentum may get pace if the previous low on NIFTY is broken. This week both SENSEX and NIFTY fell below the previous lows, but not incisively; still, this is a fifth consecutive weekly negative closing. As a result, the first time the NIFTY closed below the 50-day SMA (green line) since March 23 as we can see in the chart below. Moreover, the indicators in the below rolled down from the middle of the range after the early week’s rally that invigorated further corrective action.
In addition, the VIX after reaching rock bottom in the last two decades is exhibiting a sign of reversal which has an inverse relation with the market.
The indispensable take-away from the chart: In the past two months the NIFTY had two vertical rallies as enunciated by the blue lines. The last rally has been corrected completely and the bottom of the last penultimate rally lies at 18700 which coincides with 21-EMA (purple line). Hence, by simple technical configuration, NIFTY is likely to be corrected further.
Conclusion
I would like to conclude with the same words that I wrote in my last blog; perhaps, the market has demonstrated clear evidence of being in a distribution phase which suggests that sellers are active at a higher level and refrain themselves at the lower level, 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