BSE Sensex and NSE Nifty 50 index chart patterns – May 03, 2013

BSE Sensex index chart

Bulls (i.e. FIIs) emerged winners on another holiday-shortened week of trading, keeping Sensex above the blue downtrend line throughout the week. DIIs continued with their selling, and managed to stall the bull charge at the resistance level of 19760 (explained in last week’s analysis). 

The 3 months long bull market correction seems to be over. The 20 week and 50 week EMAs are both rising and the index is trading above them. In case the index pulls back towards the downtrend line next week, it will be an adding opportunity.

RBI’s announcement of a 25 bps cut in repo and reverse repo rates couldn’t excite the market because of the Governor’s hawkish stance on future rate cuts. A convincing  move above the resistance level of 19760 should improve market sentiments.

Weekly technical indicators are turning bullish. MACD is moving up towards its falling signal line in positive territory. ROC has crossed above its 10 week MA into positive zone. RSI is below its 50% level, but moving up gradually. Slow stochastic has risen to its 50% level.

Note that the uptrend line connecting the bottoms touched in Dec ‘11 and Jun ‘12 did not get tested during the recent correction. Once the Sensex crosses above the 19760 level, a new uptrend line connecting the Jun ‘12 and Apr ‘13 lows will be drawn. The new trend line will act as a support for the next leg of the bull market.

NSE Nifty 50 index chart

Just when the Law Minister’s interference in the CBI investigation into the coal block allocation scam had taken centre stage in Parliament, a bribery incident related to the posting of a member of the Railway Board has got the Railway Minister embroiled in controversy. Citizens of India should have no doubts that the UPA alliance is a den of thieves.

Q4 results showed good performances by two more private banks – Kotak Mahindra and ING Vysya. Bharti Airtel’s results were disappointing, thanks to their African adventure. Titan posted a decent set of numbers. But the star of the week was undoubtedly HUL – management declared better than expected numbers, and then announced a huge buyback at a premium.

The daily bar chart of Nifty rose above the blue downtrend line and even closed above the resistance level of 5970 for a day before slipping a bit on profit taking. The 20 day EMA had bounced up after a slight dip below the 20 day EMA, and has now crossed above the 50 day EMA – signalling the end of the correction.

Daily technical indicators are looking bullish but overbought. MACD is rising above its signal line towards its overbought zone. ROC has dropped from its overbought zone and slipped below its rising 10 day MA. RSI and Slow stochastic are inside their respective overbought zones, and have started sliding down.

Any pullback towards the blue downtrend line can be used to add to existing holdings.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty 50 indices have halted near their Mar ‘13 tops. The halts should be temporary. Both indices should resume their upward moves and touch new 52 week highs. Hold. Add more on convincing moves past Mar ‘13 tops.