Weekly Market Summary:
Even as the market have swung around in drunken gyration, still, Indian equity market has managed to closed the week with solid gains. The global volatility was quite high on the back of possible “trade war” between US and China. The Nifty after having a positive start on Monday, did plummet to 10100 on Wednesday, but managed to close the week with net gain of 217 points, or 2.15% at 10322 in last two days. Similarly, BSE Sensex gained 658.29 points, or 2% before closed at 33626.97.
Tenacity of technology sector remained invincible; however, underperformance was quite visible as compared to benchmark indices as CNXIT gained only 91 points this week. Financial stocks were among the best performer; even auto’s witnessed a buying interest at lower levels. On the flip side, metals continued to struggle to stay above the previous week closing, perhaps, due to trade war between US and China.
Current Outlook:
In this quite volatile week, Nifty has gyrated approximately 600 points. In that dangerous and unpredictable environment, it seems fair to suggest that any form of rational market analysis – whether it’s economic, fundamental, or technical – takes a back seat to daily headlines. Last week, I wrote and depicted that one-year long term trend on daily chart is clear cut broken and I assumed that bulls has lost the charge which eventually, will be taken over by bears. However, the way market has recovered from lower levels in last two weeks suggest that bulls has not dead completely and ready to resurgent against bears.
Now, earning season is about to get underway with thousands of companies scheduled to report their Q4 numbers. It’s an exciting time each quarter when companies are rewarded and punished depending on their results. Since, after breaking some technical key levels on individual stocks, it’s time to go through the fundamental analysis post earning.
It’s always interesting to watch how traders react to a specific earnings report since there’s really no way of telling what the reaction will be. For example, a company might beat earnings expectations but the stock might sell off. Or a company might miss earnings expectations and garner a positive response. And it’s because of this unpredictability that it’s dangerous to hold stocks into an earnings report. But, if you are able to determine which companies beat top and bottom line expectations, you might be able to put yourself into a position to profit once the dust has settled.
As there is a lot to write and predict, I think the best strategy is to wait patiently before draw any conclusion for further direction of the market.
Conclusion:
The question of the direction of the market has not been resolved yet, but the intermediate trend seems to be NEUTRAL, so now is not the time to try to pick a bottom. If the market rallies further, somewhere along the way the trend will kick back over to BUY. In the meantime, I will assume that market is trying to identify the direction or trend. Hence whatever positions you take keep a tight stop loss.
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Invest patiently..!! Be a Savvy Investor..!!
Pankaj