In an apparent change of stance, FIIs turned net buyers of equity - worth Rs 17.4 Billion - during the first week of trading in 2018. DIIs were net sellers of equity worth Rs 9.4 Billion as per provisional figures, but they were net buyers on Thu. & Fri. (Jan 4 & 5).
Sensex (34154) and Nifty (10559) closed at new highs at the end of the week, but haven't made much upward progress after breaking out above 'flag' patterns three weeks back.
The Nikkei India Services PMI rose to 50.9 in Dec '17 against 48.5 in Nov '17 (a number above 50 indicates expansion). The Composite PMI (Manufacturing plus Services) rose to 53 in Dec '18 against 50.3 in Nov '17 - highest since Oct '16.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex has been consolidating sideways within a 'rectangle' pattern for the past three weeks - after breaking out above a bullish 'flag' pattern.
The rising 20 day EMA has provided good downside support. On Fri. Dec 5, the index broke out and closed just above the 'rectangle' - on the back of combined FII and DII buying. But the breakout hasn't been a convincing one.
Daily technical indicators are in bullish zones. MACD is about to bounce up after seeking support from its signal line. ROC is trying to cross above its falling 10 day MA. RSI is moving sideways at the edge of its overbought zone. Slow stochastic has bounced up from the edge of its overbought zone.
All four indicators are showing negative divergences by failing to touch new highs with the index. A correction towards the lower edge (33700) of the 'rectangle' is possible.
Combined buying by FIIs and DIIs - like on Jan 4 & 5 - can propel the index higher. Let your asset allocation plan guide you on whether to buy, hold or book partial profits.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty rose to touch new intra-week (10566) and closing (10559) highs during the first week of trading in 2018. The index is trading above its three rising weekly EMAs in a bull market.
Despite bullish fervour (note the strong volume support), the index hasn't progressed very far above the 10490 level (the intra-week high touched 8 weeks back).
Weekly technical indicators are in bullish zones. MACD has merged with its signal line at the edge of its overbought zone. RSI has entered its overbought zone after 5 months. Slow stochastic is well inside its overbought zone. ROC is looking bearish by falling from its overbought zone and crossing below its 10 week MA.
Nifty's TTM P/E has increased to 26.99 - well above its long-term average. The breadth indicator NSE TRIN (not shown) is rising inside its overbought zone, and can trigger a correction.
Bottomline? Sensex and Nifty charts have closed at new highs but are in sideways consolidation zones. Concerns about Q3 (Dec '17) results have prevented bulls from charging ahead. Lower base effect may lead to some earnings growth in Q3. Any dips can be used to add to existing holdings.
(Note: Don’t worry about index fluctuations! Learn how to choose fundamentally strong mid-cap and small-cap stocks. Become a paid subscriber of my Monthly Investment Newsletter. A limited number of new subscriptions are being offered till Jan. 21, 2018. Enrollments have started. Contact me for details: mobugobu@yahoo.com.)
Sensex (34154) and Nifty (10559) closed at new highs at the end of the week, but haven't made much upward progress after breaking out above 'flag' patterns three weeks back.
The Nikkei India Services PMI rose to 50.9 in Dec '17 against 48.5 in Nov '17 (a number above 50 indicates expansion). The Composite PMI (Manufacturing plus Services) rose to 53 in Dec '18 against 50.3 in Nov '17 - highest since Oct '16.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex has been consolidating sideways within a 'rectangle' pattern for the past three weeks - after breaking out above a bullish 'flag' pattern.
The rising 20 day EMA has provided good downside support. On Fri. Dec 5, the index broke out and closed just above the 'rectangle' - on the back of combined FII and DII buying. But the breakout hasn't been a convincing one.
Daily technical indicators are in bullish zones. MACD is about to bounce up after seeking support from its signal line. ROC is trying to cross above its falling 10 day MA. RSI is moving sideways at the edge of its overbought zone. Slow stochastic has bounced up from the edge of its overbought zone.
All four indicators are showing negative divergences by failing to touch new highs with the index. A correction towards the lower edge (33700) of the 'rectangle' is possible.
Combined buying by FIIs and DIIs - like on Jan 4 & 5 - can propel the index higher. Let your asset allocation plan guide you on whether to buy, hold or book partial profits.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty rose to touch new intra-week (10566) and closing (10559) highs during the first week of trading in 2018. The index is trading above its three rising weekly EMAs in a bull market.
Despite bullish fervour (note the strong volume support), the index hasn't progressed very far above the 10490 level (the intra-week high touched 8 weeks back).
Weekly technical indicators are in bullish zones. MACD has merged with its signal line at the edge of its overbought zone. RSI has entered its overbought zone after 5 months. Slow stochastic is well inside its overbought zone. ROC is looking bearish by falling from its overbought zone and crossing below its 10 week MA.
Nifty's TTM P/E has increased to 26.99 - well above its long-term average. The breadth indicator NSE TRIN (not shown) is rising inside its overbought zone, and can trigger a correction.
Bottomline? Sensex and Nifty charts have closed at new highs but are in sideways consolidation zones. Concerns about Q3 (Dec '17) results have prevented bulls from charging ahead. Lower base effect may lead to some earnings growth in Q3. Any dips can be used to add to existing holdings.
(Note: Don’t worry about index fluctuations! Learn how to choose fundamentally strong mid-cap and small-cap stocks. Become a paid subscriber of my Monthly Investment Newsletter. A limited number of new subscriptions are being offered till Jan. 21, 2018. Enrollments have started. Contact me for details: mobugobu@yahoo.com.)
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