Weekly Market Recap
In yet another strong week indices continued to surge to a fresh all-time high till Thursday – the NIFTY touched the brink of the 20K mark – extending its record-breaking run to the fourth consecutive week. However, the party was disrupted on Friday by IT stocks after Infosys declared its below-estimated earning late Thursday. The sharp reversal was witnessed among all the IT stocks, as a result, the IT index has given up all its last week’s solid gain, but the gain in banking stocks has precluded the NIFTY from negative weekly closing.
In the week gone by the benchmark SENSEX gained 623 points, or .94% to close at a new high of 66684, similarly, NIFTY surged 180 points, or .92% settled at 19745. While BANKNIFTY was the star performer after gaining 2.8% to scale at a new all-time-high at 46075.
Current Outlook
This week, the number of companies reporting earnings expanded with heavyweights from IT, banking, and Reliance getting the most attention and that comprises more than 80% of weightage in NIFTY. Two heavy-weight banks ICICIBANK and KOTAKBANK posted their earnings on Saturday whose impact is yet to be seen on Monday but looks like these two stocks have already discounted the positive earnings as they have rallied quite well in the past few days.
Unequivocally, the market appears heated after the strong run and that makes it quite vulnerable to sharp and deep correction. The corrective move on Friday gave us the signal about the precocious and unheralded incisive correction that can happen at any time as we can see in the chart below. And it is quite certain that the correction would be deep enough to create pandemonium in the market.
A lot depends on banking stocks as they are enjoying the luxury of maximum weightage in the benchmark. Though BANKNIFTY has emerged as the leader and sitting at an all-time high, it has deviated significantly from its moving average which is fair enough to invite the corrective move.
Conclusion
Last week, technically we saw the breakout above the flag formation on NIFTY and the implicated target was around or above 20K which has almost touched this week; the sharp reversal on Friday indicates further correction which is needed though. However, nobody knows the magnitude of the correction, hence keep a tight stop that’s a key.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Disciplined; Be a Savvy Investor..!!
Pankaj