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Wednesday, February 17, 2016

Nifty chart: a midweek update (Feb 17 '16)

There has been no let up in FII selling. In the first three days of the week, their net selling in equities crossed Rs 2800 Crores. DIIs more than matched them with net buying in equities worth Rs 2950 Crores.

WPI inflation for Jan '16 was -0.9% - its 15th straight month of contraction. WPI was -0.73% in Dec '15 and -0.95% in Jan '15. However, rising food prices that led to an increase in CPI inflation remain a concern.

Exports fell by 13.6% to $21.1 Billion in Jan '16 against $24.4 Billion a year ago. It was the 14th straight month of contraction. Imports also fell - by 11% to $28.7 Billion in Jan '16 against $32.2 Billion in Jan '15. Trade deficit was at an 11 month low of $7.6 Billion.


The daily closing chart pattern of Nifty 50 seems to be in the throes of a 'dead cat bounce' after falling to a high-volume 'panic bottom' last Friday (Feb 12 '16). All three EMAs are falling, and the index is trading below them in a bear market.

Two of the three daily technical indicators - RSI and Slow stochastic - have corrected oversold conditions but remain in bearish zones. MACD is sliding deeper inside its oversold zone.

On longer term weekly chart (not shown), the index has pulled back to its 200 week EMA after falling below it on Friday.

The breadth indicator NSE TRIN (not shown) has dropped from its oversold zone. Some more correction and a re-test and possible breach of last Friday's low of 6869 is on the cards. 'Panic bottoms' seldom hold.

This isn't the time to be aggressive - as a bull or a bear. Just stick to your asset allocation plan and let the plan help you to decide what you should be doing.

2 comments:

Ramchandra said...

Dear Sir,

Thank you very much for much needed analysis in difficult time.

Sir, what I noticed is even during bounce back rally which happened for last 2 days, FII were net seller.

Time has come to one who wish to correct their mistakes by cleaning their portfolio. Check for share performance (not in terms of market price, but in terms of their business performance) and realign the allocation.

I am delighted to be associated with you. Most of the companies are performing better during difficult phase and holding on their levels.

Thanks again.

Regards,
Ramchandra

Subhankar said...

Thanks for the kind words, Ramchandra.

Identifying your investing mistakes, then correcting (and not repeating) them are sure steps towards maturity as an investor.

It is my pleasure to share. You need not wait for my posts - send me an email at any time if you have any questions or doubts.