Weekly Market Recap
Once Again buyers demonstrated a strong interest at the lower end of the last two-month trading range and posted a solid weekly gain after a last two consecutive weekly decline on NIFTY. Almost all the sector gain in tandem but some extra gain witnessed in industrials as I mentioned in my last note that sector has bucked the downtrend last week.
In the week gone by the benchmark SENSEX surged whopping 1021 points or 2.08% and reclaim the 50K mark to close at 50029 and NIFTY gained 360 points or 2.48% to close 14867. While financials underperformed by a half of percentage as a result BANKNIFTY gained 1.62%.
Current Outlook
This week strong closing left an impression that NIFTY at least should open higher or continue to rise further, however, I fathom and found that if we remove the moving averages from the chart the current pattern is precisely juxtaposition by last month pattern where price made a lower low and recovered sharply, see the shaded portion on the chart below. It is indispensable to note that this pattern is making a lower lows and lower highs which is not a good configuration for the bulls until proven otherwise. The next upper range of this falling channel is somewhere around 15280 that would be the third lower high in this pattern. At present the indicators in the below panel have started to roll up supporting the short-term uptrend in forthcoming week. Moreover, the market breadth has been quite strong through the week which again suggesting higher prices.
As per the current dominant feature on the chart traders may follow the buy on dips and sell on rise strategy unless we see breakout or breakdown on either side out of the channel. Importantly, this channel is not dispositioned much to the lower side, indicating continuation of the pattern in the foreseeable future. Hence, outlook seems to be a range bound market for quite some time.
Conclusion
There are few stocks which are on the verge of decline or rise ostentatiously but need to wait to unravel the path. Hence, it is prudent to keep your position light as VIX is hovering at the lowering end of the range, certainly there is enough to fall further but normally that indicates the silence before the storm.
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Be Patient…; Be a Savvy Investor..!!
Pankaj