Weekly Market Recap
It was a sluggish week for the market. NIFTY opened lower on Monday and remained low throughout the week until some recovery came in in the last hours on Friday. Technology which has contributed significantly to the recent decline continued to lead the fall. However, there are groups of stocks among Auto and Infra which have gained momentum and rising sharply.
In the week gone by the benchmark, SENSEX shed 721 points, or 1.32% to closed at 53760, similarly, NIFTY fell 171 points or 1.06% to 16049. BANKNIFTY also fell in tandem and 1.26%.
Current Outlook
The dominant feature on the below chart is still appearing downward, however, as I mentioned last week, I have found enough evidence which is supporting the idea of selling absorption at the lower level. This has been reflected by the falling VIX along with other indicators. Most importantly the price behavior is falling sluggishly but rising aggressively.
While we may still have negative long-term expectations for the market, I noticed that few of the stocks are looking rather bullish intermediate-term. After looking at participation data, I still believe NIFTY has more upside ahead. Though the falling channel is quite intact, recent action suggests the price may try to go toward the top of the channel before turning back. Only two sectors – Technology and Materials — have been making new lows, but the rest are either showing rising bottoms from the June low or are making a double bottom against that low which implies further upside.
There were some interesting groups out there within Auto, Banking, FMCG, and Infra. Overall, among the indicators in the lower panel, the RSI is positive, rising, and not overbought. The MACD just accelerated above the zero line. Stochastics have tipped up. Hence, the given conditions are showing an intermediate-term bullish pattern.
Conclusion
Despite all the negative news that continues to pour out, fear is subsiding as reflected in the VIX. That shows the bears may lose their grip. As fear subsides, so too does the panicked and impulsive selling, thus paving the way for upside.
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Be Patient; Be a Savvy Investor..!!
Pankaj