Weekly Market Recap

In a follow through of last week solid bounce from lower end of the trading range on the back of corporate tax cut, the rally continued on Monday, only for one day, rest of the week both NIFTY and SENSEX remained in range with alternate days of up and down. Eventually, NIFTY closed down 200 points down from the high made on Monday.

In the week gone by, the benchmark SENSEX gained 807 points, or 2.13% settled at 38822, similarly, NIFTY surged 238 points, or 2.11% closed at 11512.

My thoughts

First time, I am introducing this section “My Thoughts” and will be adding time to time whenever I feel its relevant and important from stock market point of view to share my thoughts with my blog readers.

I have been writing about government best possible interference or action to arrest the decline in the stock market. I was just thinking what reason would have incited the government to took such a bold step of corporate tax cut, specially steep cut for manufacturing industries that too for those who will start the unit from October onwards, at times when it is getting difficult to contain the fiscal deficit targeted for this year. On Wednesday morning, while going to the office the news about bilateral trade talks between Modi and Trump caught my attention, amidst ongoing trade war between US and China for quite some time. Perhaps, that provided the insight for my ongoing thoughts. Then, I googled the APPLE manufacturer in India, it took me to https://www.igeeksblog.com/iphone-manufacturer-foxconn-plans-apple-plant-in-india/ everything is clearly written on home page. It is outright that recent move wasn’t a prompt decision, in fact it was well-planned, years-long decision that government executed at right time in order to the help the US to shift his manufacturing base into India from China along with fulfilling government’s own manifesto “ Make In India” and yes, most importantly to arrest the downfall in stock market.

How it is relevant from market perspective?. I think, market makers or smart money might have used or may use this opportunity to exit/ sell at higher levels. Or we can say money may outflow through FII’s and FPI’s route, but may come back through FDI route. That suggest selling is evident in foreseeable future.

Thoughts, expressed here in are my personal and I may be completely wrong, you may agree or disagree. Don’t take any action based on my assumption.

Current Outlook

The dominant feature of below weekly chart is possible head and shoulder formation under way, which doesn’t seem to be perfect stretched and tilted downward from right side; however it won’t be a official head and shoulder pattern until price refuse to go above red horizontal line as depicted in chart. It may take some time to take appropriate action, but I may act upon my assumption until proven wrong. The minimum downside target could be much lower from current level if the pattern confirmed. The only positive note at this point is upside momentum still exist and there is a scope for NIFTY to reach at previous peak as indicators in below panel of the chart have enough room before they become over bought. However, on daily chart below it looks like a climactic action which suggest upside may be over.

Weekly Chart

Daily Charts

 

I am stopping here as it seems quite lengthy. Hence, outlook which changed from negative to positive in last two weeks may turned down negative again.

Conclusion

The chart configuration aligned with my thoughts facilitate me to expect downfall going forward. However, it may take time for the market to move in my anticipation as shorting is not an easy task as compared to buying as it takes courage, patience, right level to short and most importantly exit discipline. I expect the decline may start sooner than later, but, admittedly, there is lot of work to do before confirming the head and shoulder pattern.

Feedback, comments, suggestion or questions are welcome at below comment section or at [email protected].

Keep Analysing..! Be a savvy investor..!!

Happy Investing

Pankaj