Weekly Market Recap

Historically, September is the weakest month for the stock market in last 20 years, and this September was no different, Friday closing happened to be weekly and monthly closing. The market continued to fall further this week, the fourth in a row, perhaps amid worries over liquidity crunch and redemption pressure from mutual funds.

For the week, the Sensex erased 614 points, or 1.67% closed at 36227 and Nifty down by 213 points, or 1.91% settled at 10930 (below 11000).

Current Outlook

I think, the most prominent indicators to gauge the market condition at this point are VIX (volatility Index) and market breadth (net of advance and decline), and I have written much about them in my last blogs. VIX at 17 is again a major issue; in February 2018 it went up to 24 when we saw the steep pullback in market, and market breadth is persistently on the weakest side; last Friday advance decline ratio was 0.16. Both these indicators suggest there was no buying interest at lower levels.

Moreover, rising crude oil prices could become major cause of concern in coming weeks at the time of depreciating Rupee. In short, there is lot more to observe in coming week.

Conclusion

The above mentioned undermining factors eventually results in sharp price pullbacks, though we have already seen the correction of approximately 10% on indices and more than 50% on individual stocks even on blue chips, still downside momentum is unprecedented high. Hence caution is warranted.

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

Pankaj Saini