Weekly Market Recap
Well…! My concern and worries about the market appeared legitimate and intact. Though, it was quite a volatile week for the market. NIFTY started off the week with the plunge followed by a sharp recovery in the middle and then fell back again on Friday. Eventually, finish the week with a significant loss.
In the week gone by, the benchmark SENSEX lost 1141 points, or 1.96% to close at 57197, similarly, NIFTY shed 303 points, or 1.74% to close at 17171. While BANKNIFTY once again led the decline and fell by over 3.5%.
Current Outlook
It is quite apparent that the supply is evident at a higher level. It is quite interesting to note that NIFTY is rising and falling in the cycle of 3 months as we can see in the chart below. And astoundingly, before every decline, the hypodermic advance came in, indicated by the blue rising arrows. First, a sharp advance came in October 2021 after some consolidation within the existing uptrend, enunciated by blue shaded vertical rectangle where NIFTY had a vertical advance with the gap-opening for four consecutive days, and then a sharp turnaround was being witnessed that resulted in the loss of vertical gain. Similarly, the same pattern is being witnessed in January and April in the interval of three months. By that means, NIFTY may fall back below the march low as lower highs and lows are forming.
However, the decline is taking the time of three months to reach the bottom while advancing only a week. This sounds perplexing but true. Normally, it takes weeks or months to recover and only days to fall. This is one of the salient features of nasty distribution where short sellers are being squeezed at lower levels and buyers are being snapped at a higher level. Eventually, you end up buying at a higher level and stuck for the years, and the only consolation you have is to call yourself a long-term investor.
In addition, one more gimmick or embezzlement is that not all the money is drawn out of all the stocks. In fact, too many Rupees or dollars chasing too few stocks. A few large-cap stocks are marking new highs in the falling market. But that’s only part of the story.
Hence, sometimes doing nothing is your best investment or trade.
Conclusion
I’ve discussed the patience that this type of cyclical bear market requires. We are very likely to have another 3-6 months of turbulence ahead. While we wait patiently for more precise signals to buy or sell, meantime we should strive to learn more and more about how the stock market operates.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj