Saturday, November 28, 2015

BSE Sensex and NSE Nifty 50 index chart patterns – Nov 27, 2015

Bulls were active in a truncated F&O settlement week. Both Sensex and Nifty closed 1% higher for the second week in a row – ending the intermediate down trend within a larger down trend.

FIIs remained bears – as they have been for most of the month. Their net selling during the week was nearly Rs 1500 Crores, as per provisional figures. DIIs were bulls. Their net buying was almost Rs 2500 Crores, and propelled the market higher.

Prime Minister’s efforts at a reconciliation with the opposition Congress party – with a view to getting the contentious GST bill passed in both houses of Parliament – seemed to boost bullish sentiments.

BSE Sensex index chart


The daily closing chart pattern of Sensex touched a higher bottom – breaking the bearish pattern of ‘lower tops and lower bottoms’ that had dominated the chart since Mar ‘15.

Is the 9 months long corrective phase over? It would seem so – though it may be a bit early to call. The clearly formed ‘inverse head and shoulders’ pattern gave the first hint of an end to the down trend.

The fact that the index took support at the extended neckline (NL) and touched a higher bottom is another bullish signal. But bulls still have a lot of work left.

The index is facing resistance from its 20 day EMA. It needs to cross above its three EMAs and the blue down trend line (which is 1400 points away) for the bull market to resume.

For that to happen, FIIs need to become buyers of equity. They may not do so before Jan ‘16.

Daily technical indicators are beginning to turn bullish. MACD has just crossed above its signal line in negative territory. ROC has entered positive zone above its 10 day MA (which has formed a ‘rounding bottom’ pattern). RSI and Slow stochastic are moving up towards their respective 50% levels.

This is as good an opportunity as any to add fundamentally strong stocks to your portfolio.

NSE Nifty 50 index chart


The weekly bar chart pattern of Nifty had formed a ‘reversal bar’ (lower low, higher close) with strong volume support in the previous week. That was the first sign of an end of the three weeks long intermediate down trend from the Oct ‘15 top.

By closing higher for the 2nd week in a row – thereby confirming the higher bottom of the previous week – the index may be finally shaking off the 9 months long bear grasp on the chart.

Bears have not been vanquished yet. The index is trading below its 20 week and 50 week EMAs, and the blue down trend line. It needs to convincingly cross above all three for the bull market to embark on the next leg of its rally.

Weekly technical indicators are in bearish zones. MACD and Slow stochastic have stopped falling and are moving sideways. ROC has dropped back into negative zone, and showing some downward momentum. RSI bounced up from the edge of its oversold zone, and is rising towards its 50% level.

Bottomline? Chart patterns of Sensex and Nifty appear to have reversed intermediate down trends. Long-term bull markets are intact because both indices are trading well above their respective 200 week EMAs. This is a good time to pick up good stocks. If you are unsure about your stock picking skills, invest in a balanced fund.


shabbir patel said...

sir..sell---above --ketne pe sell karna...ketne pe bay karna..thanks

Subhankar said...

Are you looking for short-term or long-term targets? For which index?