BSE Sensex and NSE Nifty 50 index chart patterns – Mar 15, 2013

BSE Sensex index chart

Bullish daily technical indicators had led to the following comment in last week’s post on the bar chart pattern of Sensex: “A further up move seems likely – provided the FIIs continue buying.”

FIIs continued to be net buyers while DIIs were net sellers last week. The end result was a ‘reversal week’ pattern – a higher high but a lower close. Note that the long-term resistance zone between 19000 and 19800 has come into play once again.

The bull market remains intact as long as the index trades above its rising 50 week EMA. However, unless the index can cross its previous top of 20200 (touched in the week ending on Feb 1 ‘13), bears will try their level best to stall the up move.

Weekly technical indicators look a bit bearish. MACD is positive, but drifting down below its signal line. ROC has slipped into negative territory, and is below its 10 week MA. RSI is resting at its 50% level. Slow stochastic is gradually sliding down below its 50% level.

Expect some more consolidation within the resistance zone, before another attempt at a break out occurs.

NSE Nifty 50 index chart

Contrary to consensus expectations, WPI inflation rose marginally. CPI inflation continues to remain in double-digits. The high inflation numbers may queer the pitch for an expected 25 bps interest rate cut by the RBI Governor in the coming week.

Advance tax receipts have been higher than last year’s, but is short of the collection target for this year. The UPA government has already lowered its target for PSU share divestment by 20% – but despite a successful divestment of NALCO shares they haven’t yet met the revised lower target. Bridging the large fiscal deficit remains a dream.

The daily bar chart pattern of Nifty spent a volatile week within the resistance zone between 5750 and 5950. Even traders were taken aback by the wide daily price swings.

Daily technical indicators are giving mixed signals, but with a slight bullish bias. MACD is rising above its signal line, but both remain in negative territory. ROC is positive and above its rising 10 day MA, but has turned down. RSI is meandering sideways along its 50% level. Slow stochastic has dropped from its overbought zone.

Bulls will be emboldened by the fact that the index is trading above its rising 200 day EMA. Bears will point to the higher volumes on down days – which is a sign of distribution.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty 50 indices are back inside long-term resistance zones. Some more consolidation within the resistance zones is likely. Both indices remain in bull markets, so one should remain invested.