Net selling in equities by FIIs touched Rs 24.5 Billion during the first three days of trading this week. DIIs more than matched them with their net buying - worth Rs 29.2 Billion, as per provisional figures.
A flood of domestic liquidity propelled Nifty to breakout above the bearish 'rising wedge' pattern that had formed after a correction from a 'diamond' pattern.
India's macroeconomic situation remains a concern. CPI inflation rose to 3.36% in Aug '17 against 2.36% in Jul '17. The IIP improved to 1.2% in Jul '17 against -0.2% in Jun '17, but was much lower than 4.5% in Jul '16.
The combination of rising inflation and muted industrial growth may force RBI to maintain status quo on interest rates.
The daily bar chart pattern of Nifty broke out above the 'rising wedge' pattern on Tue. Sep 12, and tested its lifetime Aug 2 high of 10138 on Wed. Sep 13.
Time to send the bears packing? Not yet. The index retreated after touching a slightly lower top of 10132 - forming a 'reversal day' bar (higher high, lower close) that often marks an intermediate top.
If the index fails to rally past its Aug 2 high of 10138 and starts correcting instead, a 'double top' reversal pattern may form - with a downward target of 9240.
The 'double top' will be technically confirmed only if Nifty falls below its Aug 11 low of 9686. With DIIs buying heavily, the probability of that happening seems low.
However, the break out below the 'diamond' followed by the formation of a bearish 'rising wedge' pattern should be treated with caution. If the index starts to correct and drops back inside the 'wedge' then bullish bets should be kept on hold.
Daily technical indicators are in bullish zones. MACD is showing upward momentum but RSI is not. Slow stochastic is inside its overbought zone and can trigger a pullback towards the 'rising wedge'.
Nifty's TTM P/E is at 26.23 - much higher than its long-term average. The breadth indicator NSE TRIN (not shown) has dropped inside its overbought zone and may limit index upside.
Nifty is trading above its three rising EMAs in a bull market. However, the index has been hesitating after touching a lifetime high 6 weeks back. Small investors should also hesitate before deciding to jump into the market feet first. When everyone appears to be greedy, one should be fearful.
A flood of domestic liquidity propelled Nifty to breakout above the bearish 'rising wedge' pattern that had formed after a correction from a 'diamond' pattern.
India's macroeconomic situation remains a concern. CPI inflation rose to 3.36% in Aug '17 against 2.36% in Jul '17. The IIP improved to 1.2% in Jul '17 against -0.2% in Jun '17, but was much lower than 4.5% in Jul '16.
The combination of rising inflation and muted industrial growth may force RBI to maintain status quo on interest rates.
The daily bar chart pattern of Nifty broke out above the 'rising wedge' pattern on Tue. Sep 12, and tested its lifetime Aug 2 high of 10138 on Wed. Sep 13.
Time to send the bears packing? Not yet. The index retreated after touching a slightly lower top of 10132 - forming a 'reversal day' bar (higher high, lower close) that often marks an intermediate top.
If the index fails to rally past its Aug 2 high of 10138 and starts correcting instead, a 'double top' reversal pattern may form - with a downward target of 9240.
The 'double top' will be technically confirmed only if Nifty falls below its Aug 11 low of 9686. With DIIs buying heavily, the probability of that happening seems low.
However, the break out below the 'diamond' followed by the formation of a bearish 'rising wedge' pattern should be treated with caution. If the index starts to correct and drops back inside the 'wedge' then bullish bets should be kept on hold.
Daily technical indicators are in bullish zones. MACD is showing upward momentum but RSI is not. Slow stochastic is inside its overbought zone and can trigger a pullback towards the 'rising wedge'.
Nifty's TTM P/E is at 26.23 - much higher than its long-term average. The breadth indicator NSE TRIN (not shown) has dropped inside its overbought zone and may limit index upside.
Nifty is trading above its three rising EMAs in a bull market. However, the index has been hesitating after touching a lifetime high 6 weeks back. Small investors should also hesitate before deciding to jump into the market feet first. When everyone appears to be greedy, one should be fearful.
No comments:
Post a Comment