Weekly Market Recap:
Finally, much awaited correction or pull back happened in the week gone by, which saw bears emerge triumphant and take the centre stage with elan. Concern over growing fiscal deficit and liquidity worries weighed on investor sentiment, which triggered the selloff in the market.
On Friday, Sensex settled at 32832.94 down by 846.3 points in the week gone by, biggest weekly fall since August 2017. Similarly, Nifty shed 267.9 points in a week and closed at 10121.8.
Metals, IT and PSU banks were the worst performer among index stocks, however no leader seems to have emerged.
Current Outlook:
On 12-Nov I wrote. “However, I have also analyzed, some big stocks are either showing a sign of Re-accumulation or initializing distribution, which has not confirmed yet, but need to be watchful closely for the confirmation. Till then, stay on course“. Now, distribution proven.
And as I have been writing consistently that higher valuations and overbought market condition need to be handle by ready to execute selling discipline or strict stop loss, and during this selloff stop must have been triggered in few stocks but not in all, depending upon your selection of stocks, while make you exit with good profit. The best part of this correction was that, there was no significant gap down on any day except 50 points down on Thursday (expiry day), which helps to exit smoothly without any damage or losing profit.
So now Question arises, what’s next? Whether the correction is just a beginning or it’s a time to buy? To get the answer, a positive correlation need to be addressed carefully between rising crude oil prices (mentioned in previous blog) on the back of reduction in output by OPEC, and a rise in volatility index (VIX). VIX is up 15% in last week, which is a sign of uncertainty.
Hence, I would wait patiently to watch this correlation before concludes any course of direction while stay invested in group of stocks in which stop has not yet triggered.
However, On seasonality index, history tells that December is the most bullish month in last 20 years.
Conclusion:
Patience is the key before you decide or anticipate the either direction of the market. Moreover, traders may harbor the idea of, to initiate the combination of long and short positions after analyzing the chart pertinently on the scale of relatively strong and weak candidate, while keeping in mind risk-reward ratio favorable.
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Invest with patience… Be a Savvy Investor..!!
Pankaj