Sunday, June 28, 2015

BSE Sensex and NSE Nifty 50 index chart patterns – Jun 26, 2015

The following comment appeared in last week’s post: “Unless FIIs turn buyers, down trends on both Sensex and Nifty charts may not get reversed any time soon.”

As per last week’s provisional figures, FIIs were net buyers of equity worth Rs 445 Crores. DIIs were also net buyers of equity worth Rs 550 Crores.

Sensex has managed to cross above its down trend line (on chart below), while Nifty is poised to do likewise. Monsoon rains have covered the entire Indian peninsula ahead of schedule – so a major market concern is out of the way.

The Lalit Modi fiasco has galvanised the opposition and put the government on the back foot. Hopefully, reform measures will not slow down as a result.

Greece’s sovereign debt problem has not been resolved yet. Only 2 more days remain for the repayment deadline set by ECB and IMF. If a last minute deal is not agreed upon, there will be repercussions in the global economy.

BSE Sensex index chart


The daily bar chart pattern of Sensex overcame resistances from the blue down trend line and the lower edge of the ‘support-resistance zone’ and crossed above its three daily EMAs into bull territory on Mon. Jun 22.

Follow up buying from bulls was missing. The index consolidated sideways within a 330 points range during the rest of the week. Which begs the question: Is the down trend over?

The answer is: Not yet. Why? Volumes (not shown on chart) during Monday’s upward break out were not significantly high. That makes a pullback to the down trend line or, even below it to the 200 day EMA, a possibility.

If the pullback halts at the down trend line or the lower edge of the ‘support-resistance zone’, the subsequent upward bounce will be a good adding opportunity.

Daily technical indicators are looking bullish and overbought. MACD is rising above its signal line in positive territory. ROC, RSI and Slow stochastic are inside their respective overbought zones, but not showing much upward momentum.

Some more consolidation or a correction is likely. Note that the entire down move from the lifetime high touched in Mar ‘15 has been a bull market correction. Analysts predicting doom and gloom and much lower index levels should be ignored.

NSE Nifty 50 index chart


The following comment was made in last week’s post on the weekly bar chart pattern of Nifty: “Unless volumes pick up, Nifty may not be able to convincingly cross above the down trend line.”

Volumes did pick up during the past week – enough to enable Nifty to cross and close above its 20 week EMA in bull territory; but not enough to cross above the blue down trend line. That may give bears an opportunity to regain control.

Weekly technical indicators are still in bearish zones, but showing signs of turning around. MACD is below its falling signal line, but moving sideways just below the ‘0’ line. ROC, RSI and Slow stochastic have bounced up from their respective oversold zones, and showing good upward momentum.

Expect another interesting fight for dominance between bulls and bears next week – with bulls having a slight advantage.

Bottomline? Bulls are on the verge of reversing the down trends on BSE Sensex and NSE Nifty charts. Bears are still in the game, and may try their best to retain control. Both indices are back in bull territories. Stay invested, and be prepared to add to existing portfolios. If you are planning to enter the market for the first time, choose a good balanced fund.


Ramchandra said...

Hello Sir,

As always perfect analysis. I just wonder how could Greece things could play...? It is very much evident from today's trade. One way my feeling says we wont turn into bear, but same thime this could be also be a trigger point and remembers me 2008 Layman brothers collaps. Can you please enlighten us on Greece effects? Or would you suggest us to wait till 5 July for refferendum called by Greece government?


Subhankar said...

Thanks for your comments, Ram.

As per Chaos theory (simplified), a butterfly fluttering its wings in Brazil can lead to a typhoon in South China Sea. If Greece exits the Euro zone, there will be repercussions in the global economy.

The good news is that the Greece problem has been brewing for a while - unlike the collapse of Lehman Brothers, which came as a surprise. Checks and balances have already been built by ECB and central banks the world over. So, any adverse effects are unlikely to be catastrophic.

India has very little economic ties with Greece. However, companies with large European businesses - e.g. IT companies, Bharat Forge, Tata Steel - are likely to get affected in the near term.