Weekly Market Recap
This week started off on a negative note but reversed sharply thereafter and rise strongly till the mid of the week but by Friday NIFTY gave up half of its gain and closed on a weak note. Still, the gain amid pessimism is decent.
In the week gone by the benchmark SENSEX gained 319 points, or .53% to close at 61002, similarly, NIFTY added 87 points, or .49% to settle at 17944. While BANKNIFTY remained weak and lost over 1%.
Current Outlook
It appears to be hard for the market to fight this downward current, although the market has standout firm post-Adani saga and recovered nicely from its lows however, bulls still struggling to advance the rally. Last week, I wrote about the horizontal overhead resistance on NIFTY (blue horizontal line) which was smoothly overcome this week as a result NIFTY managed to cross above the important downward sloping line (red line) for a while. However, the next day NIFTY fell back to the sloping line; it is yet to be clear whether it is a false breakout or just a pause before the big advance.
Since the pullback started in early December, first-time NIFTY made an attempt to cross above the downward-sloping line. Hence, it is indispensable to see how the market reacts in the coming sessions. Falling below that level will be a case of classic false breakout which might result in a significant correction. Moreover, the prominent indicators in the lower panel again appear to be rolling down from the center and market breadth also turned out to be weak on Friday along with weak banking stocks that combination certainly favors the bears.
Conversely, if this breakout is maintained it will have a positive effect on the price and the minimum implicated target on NIFTY could be the previous high.
Conclusion
So far, the deterioration of participants has been quite intact and the possibility of false breakout is quite strong; still, perhaps the minor sign of strength appeared in the form of breaking above the downward sloping line which has increased the ambiguity. Hence, provided the market is at critical juncture caution is warranted.
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Be Patient; Be a Savvy Investor..!!
Pankaj