Saturday, March 30, 2013

BSE Sensex and NSE Nifty 50 index chart patterns – Mar 28, 2013

BSE Sensex index chart

In a holiday shortened week, Thurs. Mar 28 ‘13 turned out to be a ‘quadruple witching day’ for our stock market – F&O expiry day coincided with weekend, month end and financial year end.

After languishing in the red during the first half of the day, the index suddenly spurted higher – sending bears scurrying to cover their shorts. Though the 19000 level could not be regained, the index didn’t breach the support of the 50 week EMA – keeping the bull market alive.

The index traded within the upward-sloping parallel channel through the financial year, making a modest single-digit gain. However, portfolios of many small investors that are overweight mid and small cap stocks, got decimated.


Weekly technical indicators are looking bearish. MACD is positive, but falling below its signal line. ROC is falling deeper into negative territory, below its 10 week MA. RSI has slipped below its 50% level. Slow stochastic has dropped to the edge of its oversold zone.

Some more correction/consolidation can be expected. However, a big correction can be ruled out for now, as FIIs have steadfastly remained net buyers. The index is 500 odd points above the 38.2% Fibonacci retracement level (18300) of the entire rise from the Dec ‘12 low to the Jan ‘13 high.

The ‘gap’ area between 18050 and 18290, marked in last week’s daily chart, should also provide support.

NSE Nifty 50 index chart

The withdrawal of DMK from the UPA alliance had led to a sharp fall in the index a week ago. Last week it was the turn of SP to rock the boat. But better sense seems to have prevailed, and the government may survive for another year.

Whether any important policy decisions will be implemented or not is a moot point. The government is likely to keep fighting fires – like the one that is raging in Maharashtra about NCP leaders diverting water to their factories and causing a drought for farmers.


Daily technical indicators are bearish, but showing some signs of turning around. MACD is below its signal line in negative territory, but starting to turn up. ROC is also negative and below its 10 day MA, but moving up. RSI is just above the edge of its oversold zone. Slow stochastic is trying to emerge from its oversold zone.

Nifty is clinging on to its 200 day EMA in an effort to remain in a bull market. Any upward bounce may induce bears to sell. Some more correction/consolidation is likely till annual results are declared.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty 50 indices are seeking support from their respective long-term moving averages. Some more correction/consolidation is likely. Even if both indices fall further, it may not end the bull markets. Stay invested. Accumulate fundamentally strong stocks that have been beaten down

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