FIIs were net sellers of equity during the first three trading days this week. Their total net selling was worth a huge Rs 25.3 Billion. DIIs were net buyers on all three days. Their total net buying was worth Rs 12.6 Billion, as per provisional figures.
Indian auto sales showed double-digit YoY growth in Jun '18 - albeit on lower base in Jun '17 due to BS IV and GST implementation uncertainties. Maruti (36%), M&M (25%), Tata Motors (63%), Bajaj Auto (65%), Ashok Leyland (28%), Honda Cars (37%) were the leaders of the pack.
Nikkei India's Manufacturing PMI improved to 53.1 in Jun '18 from 51.2 in May '18. The Services PMI climbed to 52.6 in Jun '18 from 49.6 in May '18. (The 50 mark separates growth from contraction.) The Composite (Mfg. + Services) PMI rose to 53.3 in Jun '18 from 50.4 in May '18.
The following comments were made in last week's update on the daily bar chart pattern of Nifty: "Bears have forced open the door for an index fall below the 50 day EMA, and a test of support from the 200 day EMA. Will Nifty fall that far? May be not right away. Expect support from the zone between 10400 and 10550.."
Just as expected, Nifty dropped below its 50 day EMA (on Thu. Jun 28) and received support from the zone between 10400 and 10550. The subsequent pullback rally is facing resistance from the (green) up trend line.
The index has closed above its three EMAs in a bull market. A convincing move above the (purple) down trend line will put bears on the defensive. Note that on a few past occasions when Nifty moved above the 'gap' (formed on Feb 5), it faced resistance from the down trend line and fell below the 'gap'.
Will this time be different, or will the pattern repeat? Volumes (not shown) on recent down days have remained strong. The number of declining stocks have been higher or equal to the number of advancing stocks during the pullback rally. Both are bearish signs.
Daily technical indicators are looking neutral to bullish, and are showing slight upward momentum. MACD is below its signal line in neutral zone. RSI is trying to move above its 50% level. Slow stochastic received support from the edge of its oversold zone, and has moved up to neutral zone.
Nifty's TTM P/E has moved up to 26.02 - which is much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is oscillating in neutral zone, hinting at near-term index consolidation.
Oil's price is not showing any signs of moderating in the near future. Coupled with a weak Rupee against the US Dollar, it is creating an environment for higher inflation and higher interest rates. A slew of IPOs are in the pipeline - including a Rs 30 Billion offering from HDFC's AMC. Liquidity may get squeezed out of the secondary market.
Investors should be cautiously optimistic, and remain invested. Avoid impulsive buying or selling till the consolidation/correction resolves itself into a clear trend.
[Is this a good time to buy mid-cap and small-cap stocks, or should you wait for a deeper correction? Answers to such questions can be found in my Monthly Investment Newsletter. Paid subscriptions are being offered only for a limited period. Send an email to mobugobu@yahoo.com for details. Subscriptions will remain open till July 21, 2018.]
Indian auto sales showed double-digit YoY growth in Jun '18 - albeit on lower base in Jun '17 due to BS IV and GST implementation uncertainties. Maruti (36%), M&M (25%), Tata Motors (63%), Bajaj Auto (65%), Ashok Leyland (28%), Honda Cars (37%) were the leaders of the pack.
Nikkei India's Manufacturing PMI improved to 53.1 in Jun '18 from 51.2 in May '18. The Services PMI climbed to 52.6 in Jun '18 from 49.6 in May '18. (The 50 mark separates growth from contraction.) The Composite (Mfg. + Services) PMI rose to 53.3 in Jun '18 from 50.4 in May '18.
The following comments were made in last week's update on the daily bar chart pattern of Nifty: "Bears have forced open the door for an index fall below the 50 day EMA, and a test of support from the 200 day EMA. Will Nifty fall that far? May be not right away. Expect support from the zone between 10400 and 10550.."
Just as expected, Nifty dropped below its 50 day EMA (on Thu. Jun 28) and received support from the zone between 10400 and 10550. The subsequent pullback rally is facing resistance from the (green) up trend line.
The index has closed above its three EMAs in a bull market. A convincing move above the (purple) down trend line will put bears on the defensive. Note that on a few past occasions when Nifty moved above the 'gap' (formed on Feb 5), it faced resistance from the down trend line and fell below the 'gap'.
Will this time be different, or will the pattern repeat? Volumes (not shown) on recent down days have remained strong. The number of declining stocks have been higher or equal to the number of advancing stocks during the pullback rally. Both are bearish signs.
Daily technical indicators are looking neutral to bullish, and are showing slight upward momentum. MACD is below its signal line in neutral zone. RSI is trying to move above its 50% level. Slow stochastic received support from the edge of its oversold zone, and has moved up to neutral zone.
Nifty's TTM P/E has moved up to 26.02 - which is much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is oscillating in neutral zone, hinting at near-term index consolidation.
Oil's price is not showing any signs of moderating in the near future. Coupled with a weak Rupee against the US Dollar, it is creating an environment for higher inflation and higher interest rates. A slew of IPOs are in the pipeline - including a Rs 30 Billion offering from HDFC's AMC. Liquidity may get squeezed out of the secondary market.
Investors should be cautiously optimistic, and remain invested. Avoid impulsive buying or selling till the consolidation/correction resolves itself into a clear trend.
[Is this a good time to buy mid-cap and small-cap stocks, or should you wait for a deeper correction? Answers to such questions can be found in my Monthly Investment Newsletter. Paid subscriptions are being offered only for a limited period. Send an email to mobugobu@yahoo.com for details. Subscriptions will remain open till July 21, 2018.]
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