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Saturday, November 8, 2014

BSE Sensex and NSE Nifty 50 index chart patterns – Nov 07, 2014

During the three days of trading on another holiday-shortened week, both Sensex and Nifty managed to touch new highs, but consolidated sideways within narrow ranges and closed with negligible gains.

FIIs were net buyers of equity on all three days, while DIIs were net sellers. Both indices are trading above their daily and weekly EMAs in long-term bull markets.

Industry leaders and the Finance Minister have been exhorting the RBI Governor to cut interest rates because WPI and CPI inflation are on downward paths. But a rate cut seems unlikely in this calendar year – as per the Deputy Governor’s speech at a recent industry gathering.

BSE Sensex index chart


The daily bar chart pattern of Sensex touched a new high of 28010 on Nov 5 ‘14, but failed to sustain above the psychological 28000 level – gaining a meagre 3 points for the week.

Daily technical indicators are showing some signs of correcting overbought conditions. MACD is rising above its signal line towards its overbought zone, but its upward momentum has slowed down. ROC is inside its overbought zone, but falling towards its 10 day MA. RSI and Slow stochastic are inside their respective overbought zones, but turning down.

A little more consolidation is possible before the index can get its breath back for the next upward climb.

NSE Nifty 50 index chart


The weekly bar chart pattern of Nifty touched a new high of 8365 mid-week, but closed below the 8350 mark with a small gain of 15 points for the week.

Weekly technical indicators are looking overbought. MACD has re-entered its overbought zone to touch its falling signal line. ROC has slipped down to touch its 10 week MA just below its overbought zone. RSI and Slow stochastic have re-entered their respective overbought zones.

However, all four indicators are showing negative divergences by failing to touch new highs with the index – hinting at a consolidation phase before the next up move.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty indices are back in the control of bulls, and rising to new highs. As the thief said to the joker: “No reason to get excited.” Use dips to add to existing portfolios. If you are new to the market, SIP into a good balanced fund instead of trying your luck with individual stocks.

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