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Saturday, October 13, 2012

BSE Sensex and NSE Nifty 50 index chart patterns – Oct 12, 2012

BSE Sensex index chart


Readers of this blog received adequate warning in last week’s post that Sensex may face a correction or consolidation soon. So far, the correction has received good support from the 20 day EMA – despite not-so-great news from economic and political fronts.

CPI inflation has moderated a bit, but remains high. The IIP number was better than expected, but worse on a YoY basis. Arvind Kejriwal, the activist against corruption, has targetted the Law Minister for breaking the law. His next target may well be the head honcho of the main opposition party.

Q2 results have started trickling in. Infosys disappointed the market once again, and its share price dropped sharply. IndusInd Bank declared a decent set of numbers, but the stock still faced selling. Despite high valuations, investors (rather, FIIs) are still buying FMCG stocks.

Daily technical indicators are beginning to look bearish. MACD is positive, but falling below its signal line. ROC is barely positive, and below its falling 10 day MA. RSI and slow stochastic have both slipped below their 50% levels. On the downside, the gap on the Sensex chart, and the blue uptrend line should provide good support.

NSE Nifty 50 index chart


The weekly closing chart of NSE Nifty 50 index has turned down after hitting the strong resistance zone between 5750 and 6000. This was expected, and is good for the long-term technical health of the chart. A drop towards the steeper of the two blue uptrend lines will correct the overbought condition, and prepare the grounds for an attempt to cross the resistance zone.

Weekly technical indicators are weakening, but haven’t turned bearish yet. MACD is positive and above its signal line, but its upward momentum is slowing down. ROC is also positive, but falling towards its 10 week MA. RSI has slipped down from its overbought zone. Slow stochastic is still inside its overbought zone, but showing signs of turning down.

Note that both the 20 week and 50 week EMAs are moving up and the Nifty is trading well above them. There is no immediate threat to the nascent bull market, and the dip towards the uptrend line may be used to enter.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty 50 indices are undergoing corrections after touching strong resistance zones. The corrections may last a bit longer – but will enable the bulls to gather strength to overcome the resistance zones. Pick and choose from stocks that declare improved Q2 results.


Piyush said...

Hello Subhankar Da,
I am posting on your blog after a long time. And you can't blame me for it. Equities have had a volatile run and recently has been on the menu of small investors like me. Have been preferring NCD's for sometime now but the flavour seems to be changing back to equities again.

You can try and recall me as the Jubilant Dominos Guy. Sought your suggestion on Jubilant Foodworks a year back.

I would like to seek your views on three scrips-
1. Forbes & Co.- Acquired it@IPO.25+ years was gokak Company then. Stock recently run up to 1k on some news and cooled off from there. i guess a loss making Co. Shapoorji grp Co. Hold/Exit???

2. MOIL- have been buying it in snall lots. Should i add more???

3. NBCC- Acquired it@IPO. Recently got Mini maharatna status. Hold/Exit/Add more..

Subhankar said...

Sure I remember you, Piyush. Since I don't track any of the stocks mentioned, I have no idea of their fundamentals. Here are technical thumb nail views:

1) Jubiliant Foodworks chart clearly shows that some people have more money than sense. Otherwise, why would they consume tasteless Domino's pizza and awful donuts?!
2) Forbes suddenly jumped up after a prolonged sideways consolidation. Such price spurts are opportunities to book partial profits and reinvest at lower levels.
3)NBCC has doubled in less than 6 months. Sell.
4) MOIL is in a clear down trend, with no sign yet of a bottoming pattern. Unless it climbs above 300, it should not be bought.

Piyush said...

thanks a Ton Subhankar Da!!!