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Wednesday, April 8, 2015

Nifty chart: a mid-week update (Apr 08 ‘15)

RBI maintained status quo on interest rates, and nudged banks to lower their lending rates. Banks had been reluctant to pass on the benefit of RBI’s two earlier 25 bps interest rate cuts to borrowers.

SBI, HDFC Bank, ICICI Bank and Axis Bank have lowered lending rates by a modest 15 bps (0.15%) each. More banks are likely to follow suit. There are some signs of increasing capital expenditure activity – going by recent corporate announcements.

The government has been proactive with its share divestment plan for the new financial year. The REC OFS (offer for sale) went through smoothly. Expect more such offers in the near term.

FIIs have been net buyers of equity worth Rs 800 Crores during the first 4 trading days of this month (though they were net sellers today). DIIs have also been net buyers of equity worth Rs 80 Crores during the same period.

Nifty_Apr0815

The daily bar chart pattern of Nifty corrected below its 20 day and 50 day EMAs and the Up trend line 2 to the lower edge of the ‘support-resistance zone’ during Mar ‘15.

It has bounced back spiritedly to retrace more than 50% of its 850 points fall. The 200 day EMA continued to rise during the correction – indicating that the long-term bull market was intact.

Nifty has managed to climb out of the ‘support-resistance zone’ with rising volume support – which is a bullish sign. However, Up trend line 2 has not been convincingly crossed yet.

Daily technical indicators have corrected oversold conditions, and are turning bullish. MACD has crossed above its signal line, but is still in negative zone. ROC has crossed above its 10 day MA to enter positive zone. RSI is facing some resistance from its 50% level. Slow stochastic has risen to the edge of its overbought zone.

Bulls still have a little work left. A strong move above 8850 should send the bears packing.

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