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Saturday, December 28, 2013

BSE Sensex and NSE Nifty 50 index chart patterns – Dec 27, 2013

A Christmas holiday shortened trading week also happened to be F&O settlement week. Activity was at a low key. Both Sensex and Nifty indices consolidated within narrow ranges, and closed slightly higher for the week.

RBI Governor’s gamble of maintaining status quo on interest rates despite high food inflation seems to be paying off. Prices of vegetables have come down considerably due to fresh seasonal supplies. Inflation numbers should cool off a little bit.

With no immediate triggers for the stock market, both indices should continue to move higher. If Q3 results of India Inc. show improvement over Q2, more retail investors will jump into the fray and propel the indices to new highs. 

BSE Sensex index chart

SENSEX_Dec2713

The 6 months daily bar chart pattern of Sensex consolidated sideways within a narrow range of 225 points. After the previous week’s sharp gyrations, the consolidation should enable the index to gather its energy for the next up move.

Daily technical indicators are in bullish zones. MACD is moving above its signal line in positive territory. RSI is moving sideways above its 50% level. Slow stochastic is rising above its 50% level. All three EMAs are rising and the index is trading above them.

In a bull market, the strategy should be to hold existing positions with a trailing stop-loss, or add to existing positions on dips. If you are still waiting for a crash to enter, you may have to wait much longer. Ignore doomsayers and index fluctuations. Pick fundamentally strong stocks – some are still available at reasonable valuations – and accumulate them gradually.

NSE Nifty 50 index chart

Nifty_Dec2713

The 2 years weekly bar chart pattern of Nifty fluctuated within a narrow range of 65 points, but closed higher for the second week in a row. Of late, the index has been correcting after 2 or 3 weeks of up moves. Such corrections should be taken in stride and used as adding opportunities.

Weekly technical indicators are looking bullish. MACD is rising above its signal line in positive territory. RSI is moving sideways above its 50% level. Slow stochastic has slipped below its overbought zone after briefly re-entering it.

All three weekly EMAs are rising and the index is trading above them. That is a clear picture of a long-term bull market.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty indices are in long-term bull markets and ready to conquer new heights. Periodic corrections have improved technical ‘healths’ of both indices and provided opportunities to add fundamentally strong mid-cap and small-cap stocks.

(Note: Still concerned about buying stocks? It is a bull market! Learn how to choose fundamentally strong mid-cap and small-cap stocks. Become a paid subscriber to my Monthly Investment Newsletter. A limited number of new subscriptions will be offered during Jan. 2014. Pre-registration has started. Contact me for details:mobugobu@yahoo.com)

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