BSE Sensex and NSE Nifty 50 index chart patterns – Oct 04, 2013

The Rupee gained nearly 2%, rising to a level of 61.25 against the US Dollar, which is its highest level since Aug 13. Weakness of the US Dollar against global currencies was caused by the continued shut-down of the US government and the looming debt ceiling.

The new RBI Governor made soothing noises by reiterating the GDP growth prediction of between 5-5.5%. He also also revealed that the Central Bank and the ruling government were in talks to ease interest rates. The market may receive a Diwali gift.

Despite HSBC’s Services PMI index falling to its lowest level since Apr 2009, indicating that the slowdown in the Indian economy isn’t over yet, FIIs continued to be net buyers. That helped both Sensex and Nifty indices to bounce up in a holiday-shortened week.

BSE Sensex index chart

The daily bar chart pattern of Sensex dropped below its 50 day EMA and tested support from its 200 day EMA before bouncing up above all three EMAs and back into bull territory. The correction from a new 52 week high after a sharp rally appears to be over.

Daily technical indicators have not quite turned bullish yet, but there are some signs of a turn around. MACD is below its falling signal line in positive zone, but has stopped falling. ROC has dropped into negative territory below its 10 day MA. RSI has bounced up above its 50% level. Slow stochastic has also bounced up after a brief dip into its oversold zone, but remains below its 50% level.

Expect the bears to put up some fight before the bulls can push the index up to new highs.

NSE Nifty 50 index chart

 

The weekly bar chart pattern of Nifty dropped into bear territory intra-week by falling below both weekly EMAs. By the end of the week, the index closed inside bull territory. (The shorter volume bar for the week is due to Gandhi Jayanti holiday on Oct 2.)

Weekly technical indicators are beginning to turn bullish. MACD has crossed above its signal line, and just entered positive zone. ROC has bounced up off its 10 week MA to enter positive zone. RSI is resting on its 50% level. Slow stochastic is at the edge of its overbought zone.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty indices successfully warded off bear attacks and remain in bull markets. The strengthening of the Rupee against the US Dollar has improved sentiments and brought FIIs back into ‘buy’ mode. Both indices have been in broad sideways consolidations during the past year – frustrating investors but providing trading opportunities. At times like these, sticking to investment plans and fundamentally strong stocks are the smart things to do.