Sunday, December 1, 2013

BSE Sensex and NSE Nifty 50 index chart patterns – Nov 29, 2013

First, the good news. GDP growth for Q2 ‘13 quarter was 4.8%, which was higher than 4.4% in Q1 ‘13, and better than the consensus estimate of 4.6%. The economy is gradually bottoming out. The bad news is that the GDP number was below 5% for the 4th straight quarter.

The other bit of good news is the increase in forex reserves. However, the fiscal deficit is surging. With inflation remaining stubbornly high, RBI may increase the repo and reverse repo rates by 25 bps in Dec ‘13. That will stifle the already dismal manufacturing growth.

Bulls felt encouraged by the signs of a turnaround in GDP – particularly in the rural sector. FIIs resumed their buying. DIIs covered their shorts. Both Sensex and Nifty indices bounced up from support zones, and are getting ready to touch new highs.

BSE Sensex index chart


The daily bar chart pattern of Sensex received good support from its 50 day EMA during the week. On Fri. Nov 29 ‘13, it broke out and closed above the downward-sloping channel within which it was trading for the past 5 weeks.

All four daily technical indicators are turning bullish. The MACD bounced up from its ‘0’ line, and is about to cross above its signal line. ROC has crossed above its 10 day MA into positive territory. RSI and Slow stochastic have risen above their respective 50% levels.

The bull market correction appears to be over. The dip gave an opportunity to enter. The index should touch a new life-time high soon.

NSE Nifty 50 index chart


The weekly bar chart pattern of Nifty has been consolidating within a ‘falling wedge’ pattern for the past 7 weeks. The index received good support from its 20 week EMA and the lower edge of the ‘wedge’. The expected break out from the ‘wedge’ is upwards.

Weekly technical indicators corrected overbought conditions, but remain bullish. MACD has started rising above its signal line in positive territory. ROC is below its 10 week MA, but has stopped falling. RSI and Slow stochastic are at the edge of their respective overbought zones.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty indices are emerging from bull market corrections. The corrections provided opportunities to accumulate fundamentally strong mid-cap and small-cap stocks that are still available at reasonable valuations. The next leg of the up move should resume.

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