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Sunday, February 19, 2017

Sensex, Nifty charts (Feb 17, 2017): bulls asserting themselves

FIIs were net buyers of equity worth a massive Rs 80.5 Billion during the week - thanks to RBI's lifting of ban on buying HDFC Bank stocks on Fri. Feb 17. The ban was reintroduced later in the day as FII buying limit of 74% was exceeded. 

DIIs were net sellers of equity worth Rs 45.4 Billion during the week, as per provisional figures. Both Sensex and Nifty closed at their highest levels in nearly 5 months.

In a move that will help implementation of GST from Jul 1, the GST Council approved a draft compensation law to reimburse any revenue loss to States

BSE Sensex index chart pattern


The daily bar chart pattern of Sensex consolidated sideways near the 'support-resistance' level of 28250 for two weeks, and successfully tested support from the up trend line drawn from the Dec 26 '16 low on Thu. Feb 16.

On Fri. Feb 17, the index opened with a big upward 'gap' but faced profit booking and closed near the low point of the day. Remember that a trend line gets stronger with each test of support (or resistance).

Daily technical indicators have corrected overbought conditions and remain in bullish zones, but are showing negative divergences by failing to rise higher with the index. Some more consolidation is likely prior to F&O expiry on Thu. Feb 23.

All three EMAs are rising and the index is trading above them in a bull market. Occasional dips towards the up trend line are providing adding opportunities.

NSE Nifty index chart pattern


The weekly bar chart pattern of Nifty has crossed above the resistance level of 8750 with strong volume support. Despite the best effort of bears, it is just a matter of time before the index crosses above its Sep '16 top of 8969.

Weekly technical indicators are looking bullish and a bit overbought. Nifty's TTM P/E has remained above 23 for most of the month - much above its long-term average.

However, the breadth indicator NSE TRIN has moved up from the extreme overbought zone - giving hopes of some more upside for the index.

Expect the index to consolidate a little around the current level before attempting to cross above its Sep '16 top.

Bottomline? Sensex and Nifty charts show that bulls are regaining control slowly and surely. FIIs are buying again. Both indices should touch new highs soon. 

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