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Sunday, May 17, 2015

BSE Sensex and NSE Nifty 50 index chart patterns – May 15, 2015

FIIs and DIIs were both net buyers of equity on Mon. May 11. For the rest of the week, FIIs turned sellers again while DIIs kept buying. The net result of all the buying and selling – as per provisional figures – was FIIs: (–) Rs 1343 Crores; DIIs: + Rs 2781 Crores.

Sensex and Nifty closed higher for the 2nd week in a row, but neither index managed to resume their up moves. Both touched higher bottoms, but lower tops during the week.

WPI inflation in Apr ‘15 was – 2.65%, contracting for the 6th month in a row. With CPI inflation below 5% and industrial growth remaining tepid, RBI is quite likely to lower interest rates soon. Government’s failure to pass the GST and land bills in the Rajya Sabha may dampen bullish sentiments.

BSE Sensex index chart


The daily bar chart pattern of Sensex managed to close above its 200 day EMA on 4 of the 5 days of the trading week gone by, but faced strong resistance from its falling 20 day EMA.

Note that the downward breach of the 200 day EMA has not been validated technically yet, as the index didn’t close below the 26350 level – which is the 3% ‘whipsaw’ limit below the 200 day EMA. That doesn’t mean that bears have given up the fight.

An aggressive bullish stance should be avoided till the index convincingly crosses above its falling 50 day EMA (currently at 27850) and the blue down trend line connecting the Mar ‘15 and Apr ‘15 tops (currently at 28400).

Daily technical indicators have corrected oversold conditions, and are turning bullish. MACD has crossed above its signal line in negative territory. ROC is above its 10 day MA, and has entered positive zone. RSI has climbed up to its 50% level. Slow stochastic has just crossed above its 50% level.

Slowly accumulate fundamentally strong stocks with appropriate stop-losses.

NSE Nifty 50 index chart


The weekly bar chart pattern of Nifty received good support from its 50 week EMA, and closed within the ‘support-resistance zone’ between 8180 and 8630.

The index touched a higher bottom but a lower top. Volumes were lower than the previous week’s. Bears are in no mood to give up. Only a convincing move above the falling 20 week EMA and the 8630 level can put bulls back on top.

Weekly technical indicators are still bearish, but showing some signs of turning around. MACD is falling below its signal line in positive zone. ROC is below its falling 10 week MA inside its oversold zone. RSI bounced up weakly from the edge of its oversold zone. Slow stochastic is trying to emerge from its oversold zone.

Technically, Nifty is recovering from a bull market correction. Use the opportunity to accumulate fundamentally strong stocks, but maintain strict stop-losses in case bears attack with renewed vigour.

Bottomline? BSE Sensex and NSE Nifty charts are recovering from strong bear attacks after touching lifetime highs. Do not expect the indices to move up in a hurry. That can happen after some consolidation within the ‘support-resistance zones’. Utilise the corrections to accumulate, but maintain appropriate stop-losses for individual stocks.

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