Weekly Market Recap

Last week I wrote that I’m neutral on index, but bullish as well as bearish on particular stocks. And this week market more or less behaved in line with my expectation as Nifty kept gyrated at higher levels and there were group of stocks which continued to rise and fall amid consolidation. Despite some weakness during middle of the week major indices managed to close the week with minor gains post sharp rally in late Friday.

In the week gone by, the Sensex gained 189 points, or .49% to settle at 38862 and Nifty added 42 points, or .36% to close at 11665, whereas Banknifty which has outperformed in recent rally was down by 342 points or 1.12% this week.

Current Outlook

The upside momentum is still clear cut in the favour of bulls along with veritable improvement in market breadth which had been the cause of concern to me for quite long time. In addition, another aggressive sector Industrial metal appeared to have downtrend reversed and I expect higher prices until the evidence proves otherwise. Moreover, consumer staples one of the defensive sector continued to drift lower, ideally this is a good configuration for a sustainable bull market.

Technically, Nifty has felt overhead resistance precisely at February 2018 high as can be seen in the chart below, though indicator window below shows that all the indicator are well placed to suggest further higher prices and given the strong upside momentum that resistance could easily be broken next week and there is fair probability that overhead resistance would turn out be horizontal support post breakout. However, I would still recommend to follow a stock specific approach rather to chase index.

Conclusion

The market is and about to reach in overbought zone in all time frames, and major overhead resistance is on head. There is a probability of major double top on Nifty, so I think caution is warranted. Conversely, the market has been irrepressible in its upward push, so if it is turned back by resistance, it could be a temporary setback.

I welcome any feedback or suggestion you may have about the content of this article.  

Keep exploring..!; Be a Savvy Investor..!!

Pankaj