Saturday, May 30, 2015

BSE Sensex and NSE Nifty 50 index chart patterns – May 29, 2015

There was good news for bears and bulls at the close of trading on May 29 ‘15. Incidentally, it was a combined daily (higher), weekly (lower) and monthly (higher) close.

Good news for bears: down trends from lifetime highs touched in Mar ‘15 (marked by blue down trend lines on Sensex and Nifty charts below) have not been reversed yet.

Good news for bulls: on monthly charts of Sensex and Nifty (not shown), ‘reversal bar’ patterns (lower low, higher close) have formed. That is an indication that the 3 months long corrections may be over.

As per provisional figures, FIIs were net sellers of equity worth Rs 4400 Crores during May ‘15 – though they were net buyers of Rs 2200 Crores on May 29. DIIs were net buyers of equity worth Rs 7500 Crores – though they were net sellers of Rs 2200 Crores on May 29.

Q4 (Mar ‘15) results continue to pour in. As expected, there have been more misses than hits. Big boys like TISCO, TELCO, M&M have been in the former category.

An interest rate cut of at least 25 bps is likely from RBI next week. A 50 bps cut will be a positive surprise. If RBI decides to wait and watch instead, bears will have a field day.

BSE Sensex index chart

The daily bar chart pattern of Sensex managed to close above its three daily EMAs in bull territory, after receiving support from the lower edge of the ‘support-resistance zone’.

The index has formed a bullish pattern of ‘higher tops and higher bottoms’ since touching a low of 26424 on May 7 ‘15, but closed lower on a weekly basis.

Failure to cross above the blue down trend line means that bears still have the upper hand.

Daily technical indicators are looking bullish, but their upward momentum is not strong. MACD is above its signal line, and poised to enter positive zone. ROC is in positive zone, but facing resistance from its 10 day MA. RSI is sliding down towards its 50% level. Slow stochastic has dropped from its overbought zone.

The index went through a decent 12% correction, and looks ready to resume its rally. Bears may not give up easily.

NSE Nifty 50 index chart

The weekly bar chart pattern of Nifty faced strong resistance from its 20 week EMA, and closed about 25 points lower on a weekly basis. The blue down trend line is likely to provide strong resistance as well.

Weekly technical indicators have corrected oversold conditions, but haven’t turned bullish yet. MACD is below its falling signal line, and moving sideways above the ‘0’ line. ROC has crossed above its 10 week MA, but remains in negative zone. RSI is moving sideways below its 50% level. Slow stochastic is rising towards its 50% level.

The index may attempt to cross above the down trend line. Strong volumes on a down week is a sign that bears are in no mood to give up control just yet.

Bottomline? BSE Sensex and NSE Nifty charts are in the process of recovering from strong bear attacks but have so far failed to cross above their respective down trend lines. Add to existing portfolios if both indices cross convincingly above their down trend lines. Stay invested till then.

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