Are you worried about the recent volatility in the Stock Market? Are you confused what to buy, sell or hold? The newsletter selects quality mid-caps and small-caps for investors with a long-term perspective and provides timely buy/sell/hold suggestions. Send an email (to address in profile below) for subscription details today.

Sunday, July 12, 2015

BSE Sensex and NSE Nifty 50 index chart patterns – Jul 10, 2015

News on the manufacturing front remains indifferent. The IIP number for May ‘15 was 2.7%, compared with 5.6% in May ‘14. The Apr ‘15 number was revised downwards to 3.4% (from 4.1%).

As per provisional figures, FIIs and DIIs were both net sellers of equity during the past week. FII net selling was worth Rs 900 Crores; DII net selling totalled Rs 180 Crores. Sensex and Nifty closed lower for the week.

A Greek bailout is being negotiated. China’s stock market intervention has stopped the fall. Monsoon rains have been fairly widespread. Three concerns for the market are out of the way.

Q1 (Jun ‘15) results will provide the next trigger. Expectations of good results are muted. Any positive surprises from companies will boost their stock prices.

BSE Sensex index chart


The daily bar chart pattern of Sensex crossed and closed above the 28100 level (which is at the middle of the ‘support-resistance zone’ between 27350 and 28800) during the first two days of the week, but formed a small ‘reversal day’ pattern on Jul 7 ‘15.

The subsequent correction found good support from the 50 day EMA. The index has formed a bullish pattern of ‘higher tops and higher bottoms’ from the low of 26307 (touched on Jun 12 ‘15).

Daily technical indicators have corrected overbought conditions, and are looking a bit bearish. MACD has just crossed below its signal line in positive territory. ROC is below its falling 10 day MA, and is trying to emerge from its negative zone. RSI and Slow stochastic have slipped below their respective 50% levels.

Expect some consolidation as the market digests Q1 results.

NSE Nifty 50 index chart


The following comment was made in last week’s post on the weekly bar chart pattern of Nifty: “The possibility of a pullback towards the down trend line (or even a drop below it) can’t be ignored.”

The index did pullback to the down trend line, and formed a ‘reversal week’ pattern (higher high, lower close) – breaking the sequence of three straight higher weekly closes.

Strong volumes on down weeks show that bears are active. However, the index is trading above its rising 50 week EMA in a bull market. That means, the pullback is providing an adding opportunity.

Weekly technical indicators are giving mixed signals, hinting at some consolidation before the up move can resume. MACD and RSI are in bearish zones, while ROC and Slow stochastic are in bullish zones.

Bottomline? The down trends on BSE Sensex and NSE Nifty charts have ended, but bears are still active. Both indices are back in bull territories. Stay invested, or add to existing portfolios. If you are planning to enter the market for the first time, choose a good balanced fund and gradually build up your capital. Leave stock-picking to expert fund managers.

(Note: Are you looking to add good quality mid-cap and small-cap stocks to your portfolio? Subscribe to my Monthly Investment Newsletter. A limited number of paid subscriptions are being offered till July 21, 2015.)

No comments: