Weekly Market Recap
It was truncated week as the market was closed on Monday, yet broader indices managed to post a solid gain on weekly basis. Nifty rallied sharply on Tuesday and Wednesday, although the last two sessions spent sideways.
In a 4-day week, the benchmark Sensex gained 607 points, or 1.68% to close at 36671 and Nifty added 171 points or 1.58% to settle at 11035.
Current Outlook
Last week, I expected and wrote that mid-caps may deliver a good return this week and as expected they performed in a similar manner, however, the momentum appeared to be dissipate in last two sessions as a result market breadth turned out to be negative once again at higher level which is not a good sign. It is important to note that once again the recent rally in Nifty stopped in the vicinity of previous high (see the chart below) that level has acted a strong overhead resistance in last 4 months. This time it’s a 5th attempt to stay above 11000 and 2nd for 11100 since 3rd December 2018.
The weakening of market breadth at higher leave some clue about the strength of the market that suggest rally is still, dominating by very few stocks which is not a constructive move rather a alarming situation. Probably, based on top 5 heavy weights chart formation this week, Nifty may succeed to surpass above resistance level (11100), but the move is sustainable or not is a big question. However, it is pertinent to wait for the break-out instead of prognosticate any move above 11100. Hence, heuristic view is still range bound unless Nifty break-out above 11100 or break-down below 10600.
Conclusion
The market is in the process of break-out or break-down. Yeah, it is not very clear yet in which direction. If it is a top then topping process has taken almost 4 months and so far the market has been very stingy with the selling it has done. However, I do not get the impression of sustainable upside move. Nevertheless, it has been some time we have seen reasonably corrective action. Hence, we should wait patiently for the confirmation of either side.
I welcome any feedback you may have about the content of this article.
Be patient..!; Be a Savvy Investor..!!
Pankaj