Weekly Market Recap
In this truncated week, NIFTY continued to hover at the support zone (green line) which is 50-day SMA (simple moving average) as we can see in the chart below. As I have mentioned earlier, this has been the solid support zone for the NIFTY in the past year.
In the week gone the benchmark SENSEX recovered 760 points, or 1.28% and reclaim the mark of 60K to close at 60067. Likewise, NIFTY gained 157 points or 1.38% to settle at 17916. While BANKNIFTY gained .73%.
Current Outlook
Technically, whenever the extra deviation arises between the price and moving averages the pullback got triggered and the price fall back towards its moving averages, this is quite a simple but effective tool and works stupendously to enhance the performance of the portfolio. So far, this configuration has been working quite well and they are worth paying attention to. However, the question is whether the NIFTY will be able to hold the support this time as well? Well, the answer lies in the forthcoming sessions. Although on the daily chart (below) it looks like NIFTY has found solid support, on weekly, this looks otherwise and suggest there is enough to fall further. There is an ambiguity on different time frames. However, the technical indicators in the below panel on both the time frames are rolling down which favours the downfall.
Still, priority must be given to the price action and unless the price fall below the support zone the existing configuration favours the bulls. The wise traders will accept this configuration and use it to help them look for the final confirmation. Though there are myriad of possibilities how the price may react going further, the one which I will be cautious about is that price may bounce from the current level and stay sidewise for quite some time and then fall back again. Or it may continue to rise further like in past, if that happens, I may not participate unless getting the veritable evidence.
Hence, as of now, the outlook appears to be positive to sideways but with utmost caution.
Conclusion
Given the past year behaviour, NIFTY appears to be at solid support, but it is prudent to consider that the correction is happening at the time of earning season and I think, no positive surprises have been surfaced so far. Hence, caution is warranted and be patient.
Feedback, comments, suggestion, or questions are welcome in the below comment section or at [email protected].
Be Patient; Be a Savvy Investor..!!
Pankaj