Sunday, March 1, 2015

BSE Sensex and NSE Nifty 50 index chart patterns – Feb 28, 2015

Some experts called it a ‘well- balanced’ budget. Detractors called it a missed opportunity to announce ‘big bang’ reforms. The stock market gave the budget a thumbs-up – as both Sensex and Nifty closed higher on budget day for the first time in 4 years.

Did the thrashing by AAP in the Delhi elections tip the Finance Minister’s hand? The pro-poor measures are hinting at the possibility. Economic inclusiveness for the poor can be achieved by providing better education and vocational training. Building toilets is commendable and will improve hygiene – but the poor will remain poor.

Increased allocations for road transport and railways, and a ‘plug and play’ system of providing all statutory clearances prior to awarding of infrastructure projects should kick-start investments. Increase in service tax will affect the middle-class.

For the first time since Aug ‘14, FIIs and DIIs were both net buyers of equity during Feb ‘15. FIIs were net buyers of Rs 6700 Crores. DIIs were net buyers of Rs 1700 Crores.

BSE Sensex index chart


The daily bar chart pattern of Sensex has been consolidating sideways within a ‘symmetrical triangle’ pattern ever since it touched a lifetime high of 29844 on Jan 30 ‘15. The ‘support zone’ (marked by blue dotted lines) between 27350 and 28800 limited the Sensex correction to 1800 points (6%) from the top.

Budget day’s trading can be termed a failed attempt at an upward break out from the triangle – despite strong volumes. The index closed at the upper edge of the triangle, and will require follow-up buying next week to break out convincingly.

Daily technical indicators are in bullish zones, but giving mixed signals. MACD is yet to cross above its falling signal line in positive zone. ROC has formed a small head-and-shoulders pattern and crossed below its rising 10 day MA in positive zone. RSI has moved up to the edge of its overbought zone. Slow stochastic is rising towards its overbought zone.

The index is trading above all its three EMAs in a long-term bull market. Time for bears to throw in the towel? A convincing move above the Jan ‘15 top of 29844 should provide the trigger.

NSE Nifty 50 index chart


The weekly bar chart pattern of Nifty closed higher for the third straight week, accompanied by an increase in volumes. It was the first ever weekly (and monthly) close above the 8900 level.

The index received good support from the zone between 8180 and 8630 (marked by blue dotted lines), and is trading above its two weekly EMAs and the Up trend line 2 in a long-term bull market.

Weekly technical indicators are looking overbought. MACD has crossed above its signal line to enter overbought zone. ROC has risen sharply above its 10 week MA to enter its overbought zone. RSI is moving sideways above its 50% level. Slow stochastic has re-entered its overbought zone.

Remember that an index can remain overbought for long periods. Nifty looks poised to touch new highs in the near future.

Bottomline? Chart patterns of BSE Sensex and NSE Nifty indices are back in bull territories and ready to touch new highs. The uncertainty regarding the budget is over. Now is a good time to study the budget proposals (they are still proposals, and amendments can take place before the budget is formally ‘passed’ by parliament). Take a re-look at your portfolio and your ‘watch list’ to decide on the next course of action.

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