Wednesday, February 22, 2017

Nifty chart: a midweek technical update (Feb 22 ‘17)

FIIs were net sellers of equity worth Rs 21.3 Billion during the first three days of trading this week. DIIs were net buyers of equity worth Rs 32.8 Billion, as per provisional figures.

Nifty moved above 8950 today and tested its Sep '16 top of 8969, but faced profit booking and closed below 8950. In the process, it formed a 'doji' candlestick pattern indicating indecision among market participants.

After Cognizant, TCS announced a share buyback scheme (at a premium to CMP) - putting pressure on other IT majors like Infosys, HCL Tech and Wipro to follow suit. 


The daily bar chart pattern of Nifty closed higher for the fifth trading session in a row - gaining more than 200 points (about 2.3%).

All three EMAs are rising and the index is trading well above them in a bull market. 

Daily technical indicators are inside their overbought zones. MACD and Slow stochastic are showing negative divergences by failing to rise higher with the index.

Nifty's TTM P/E is at 23.32 - much above its long-term average. The breadth indicator NSE TRIN (not shown) has corrected its extreme overbought condition but remains within its overbought zone.

Near term index upside appears limited. Nifty may move down to fill the 20 points upward 'gap' formed on Fri. Feb 17.

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