Weekly Market Recap
The upside momentum accelerated last week seems to have deteriorated as NIFTY skid back into the falling channel after making a serious attempt last week. It was the third breakout attempt by the NIFTY since this channel has been in play for quite some time. As a result, major indices posted a weekly loss, signalling a range bound market for next few days.
In the week gone by the benchmark SENSEX lost 473 points, or .96% to close at 48732, similarly, NIFTY shed 145 points or .98% to settle at 14677. While BANKNIFTY remained the weakest spot and led the decline by falling over 2%.
Current Outlook
Last week, based on my technical observation, and changing behaviour by the market, I concluded on a positive note, which seems to be in question post this week action. For quite some time, I have been writing about this falling channel (blue lines) on the chart which is quite evident and intact. NIFTY falling back into the channel suggest that it may drift lower towards the lower end of the range if that happens, we can see lower low on NIFTY that could also break the horizontal support (green line). Furthermore, as I pointed last week financials again turned down and giving an impression of further decline. Financials have been underperforming the market in a big way since the cascading fall last year to epic recovery. Looks like they will continue to weigh down the indices.
It is indispensable to note that while most of the major sectors like technology, metals, cement, infra, auto and FMCG are hovering at their year highs and yet NIFTY is making a lower high. Even though this week few index stocks soared over 10% but NIFTY continued to alleviate. That means much is dependant on financial stocks. Despite posting a god set of earnings investors doesn’t seems to be rhapsodic about them. It is not a good sign rather indicating time ahead for financials stock is challenging so as for the NIFTY.
On the flip side, VIX is not showing sign of peril. It remained at lower end of the range suggesting range bound condition. Hence, given the arduous and flummoxed conditions, I assume NIFTY to remain side-ways for some more time, so as the outlook unless proven otherwise.
Conclusion
It is prudent to ruminate and keep analysing the given condition unless weathercock inform us to take any action. Gumption and resilience are the need of the hour. Be patient, perseverance is the key.
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Be Patient…; Be a Savvy Investor..!!
Pankaj