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Sunday, April 19, 2015

BSE Sensex and NSE Nifty 50 index chart patterns – Apr 17, 2015

India’s Current Account (i.e. trade) deficit was almost $12 Billion in Mar ‘15 – nearly double of the deficit in Feb ‘15. Exports were lower by more than 20%. For the fiscal year 2014-15, the deficit was $137 Billion – compared with $135 Billion in the previous fiscal year.

Sentiments remained bearish in a holiday-shortened trading week. As per provisional figures, FIIs were net sellers of equity worth Rs 365 Crores; DIIs were net buyers worth Rs 490 Crores. Both Sensex and Nifty lost ground.

Despite weak Q4 results declared by Indian companies so far, Moody’s have reaffirmed their bullish outlook for the Indian economy. The government needs to accelerate infrastructure investments to keep the economy on the growth track.

BSE Sensex index chart


The daily bar chart pattern of Sensex closed above the 29000 level on Mon. Apr 13, but it wasn’t a convincing close above the ‘support-resistance zone’ between 27350 and 28800. Bears struck swiftly and pushed the index below its entangled 20 day and 50 day EMAs inside the ‘support-resistance zone’.

Daily technical indicators are still in bullish zones, but showing downward momentum. MACD is above its signal line but looks ready to drop back inside negative territory. ROC has dropped from its overbought zone and crossed below its 10 day MA. RSI is falling towards its 50% level. Slow stochastic has fallen from its overbought zone.

Some more correction is likely. Looks like company earnings may take a couple of more quarters to catch up with market valuation. However, the index continues to trade above its rising 200 day EMA in a bull market.

Stay invested and closely study Q4 results for pockets of opportunity.

NSE Nifty 50 index chart


The weekly bar chart pattern of Nifty formed a ‘reversal week’ pattern (higher high, lower close) and dropped back inside the ‘support-resistance zone’ between 8180 and 8630.

The index continues to face overhead resistance from Up trend line 2, but managed to stay above its two weekly EMAs in a bull market.

Weekly technical indicators are giving mixed signals. MACD is sliding below its signal line in positive territory. ROC is below its 10 week MA, and failed to enter positive zone. RSI is moving sideways above its 50% level. Slow stochastic crossed above its 50% level.

Expect the index to consolidate around current levels for some time before resuming its up move. IPOs and FPOs are getting oversubscribed – which is a clear indication of underlying bullish sentiment.

Bottomline? BSE Sensex and NSE Nifty charts are still feeling the effects of bearish sentiment, and have dropped back inside their ‘support-resistance zones’. Both indices are in long-term bull markets. There is no need to panic and sell. Stay invested. Maintain appropriate stop-losses for individual stocks in your portfolios.

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