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Wednesday, March 29, 2017

Nifty chart: a midweek technical update (Mar 29 ‘17)

FIIs were net buyers of equity worth a huge Rs 74.5 Billion during the first three trading days this week. DIIs were also net buyers of equity - worth Rs 10.4 Billion, as per provisional figures.

Despite all the buying, Nifty has been stuck in a range between 9000 and 9150 after an intra-day move above 9200 on Fri. Mar 17.

NDA government is facing flak from opposition parties by trying to introduce a large number of amendments to the Finance bill. The GST bill has also been tabled in Parliament. Transition of power in UP has caused a lot of turmoil so far.

The daily bar chart pattern of Nifty has so far received good support from the 85 points 'gap' formed on Mar 14. 

The index dropped inside the 'gap' (marked by grey rectangle) twice - on Mar 22 and Mar 27 - but bounced up on both occasions.

Part filling of the 'gap' should have been followed by a resumption of the up move from the Dec '16 low. F&O expiry on Thu. Mar 30 may be the reason for a bit of caution among market players.

All three technical indicators are in bullish zones after correcting overbought conditions, but are not showing much upward momentum. Some more consolidation or correction can't be ruled out.

The index is trading above its three EMAs in bull territory. The distance between the index and its 200 day EMA is almost 650 points - which is not a 'healthy' condition technically.

Nifty's TTM P/E has inched up to 23.74 - much higher than its long-term average, and limiting index upside. The breadth indicator NSE TRIN (not shown) is in neutral zone. 

The Rupee is strengthening against the US Dollar - thanks to FII and FDI inflows. With DIIs also turning buyers, the index can move higher. 

This is a good time to think about asset reallocation by booking partial profits in equity holdings.


satvinder Pal Singh said...

Sir advise is needed as I am holding Tata steel stock from long time I have 207 shares in my ac. at avg price of 345/share. I am thinking about selling atleast 50 shares. Pl. guide on Technical and fundamental parameters. I will be greatful for your advice. Thanks.
Satvinder Pal Singh.

Subhankar said...

@Satvinder: TISCO is trying to come out of a long slump post Corus acquisition. It has already undergone a nice rally, and can move up further to 550-600.

Partial profit booking near a lifetime high is always a good idea.