FIIs were net sellers of equity during the first two trading days this week, but net buyers today. Their total net buying was worth Rs 0.5 Billion. DIIs were net buyers on all three days. Their total net buying was worth Rs 10.5 Billion, as per provisional figures.
The GST Council may consider reduction in tax rates on several goods and services with low revenue implications as part of the tax rationalisation exercise in its next meeting on July 21.
Q1 (Jun '18) results season of India Inc. has started with a bang. TCS reported better than expected numbers. IndusInd Bank turned out another solid quarter. Prakash Ind. announced spectacular triple-digit growth in net profit.
After being thwarted by bears a few times, the daily bar chart pattern of Nifty finally broke out above the (purple) down trend line that had dominated the chart for more than 5 months.
All three EMAs are rising, and the index is trading above them in a bull market. Time for bulls to start celebrating? Yes, but with a less vigorous approach. Why?
There are a few technical reasons:
1) volumes (not shown) accompanying the breakout on Mon. Jun 9 were moderate - not sufficiently strong to technically validate the breakout; 2) the index has moved a bit far above its 20 day EMA, which is a sign of an overbought condition; 3) negative divergences visible on MACD and RSI, which touched lower tops than their May '18 tops, while the index has moved higher; 4) today's trading has formed a 'doji' candlestick that may be part of a bearish 'evening star' pattern (which will get confirmed only if tomorrow's trading forms a bear candle).
As often happens after a breakout, a pullback towards the down trend line can be expected. Can the pullback cause the index to drop below the down trend line? The possibility can't be ruled out at this stage.
Daily technical indicators are bullish, and looking overbought. MACD has crossed above its signal line, and rising towards overbought zone. RSI is also rising towards its overbought zone, but its upward momentum has reduced. Slow stochastic is well inside its overbought zone, and can trigger a pullback towards the down trend line.
Nifty's TTM P/E has moved up to 27.2 - which is much higher than its long-term average and in overbought zone. The breadth indicator NSE TRIN (not shown) is falling in neutral zone, and may limit near-term index up side.
Trump has announced more tariff's on Chinese imports. FIIs are fleeing Asian emerging markets. Oil's price remains high, and can go higher. Rupee is tumbling against the US Dollar, and RBI is forced to sell Dollars to prevent a Rupee free fall. Inflation is rising, and interest rates will follow. Lots of IPOs are in the pipeline.
The macro environment is not conducive for a sustained bull rally. Stay invested, but don't feel euphoric about this week's Nifty breakout.
(Note: Planning to add quality mid-cap and small-cap stocks to your portfolio? Subscribe to my Monthly Investment Newsletter. Paid subscriptions are being offered to blog visitors, followers and subscribers till Jul 21, 2018. Contact me at mobugobu@yahoo.com for details.)
The GST Council may consider reduction in tax rates on several goods and services with low revenue implications as part of the tax rationalisation exercise in its next meeting on July 21.
Q1 (Jun '18) results season of India Inc. has started with a bang. TCS reported better than expected numbers. IndusInd Bank turned out another solid quarter. Prakash Ind. announced spectacular triple-digit growth in net profit.
After being thwarted by bears a few times, the daily bar chart pattern of Nifty finally broke out above the (purple) down trend line that had dominated the chart for more than 5 months.
All three EMAs are rising, and the index is trading above them in a bull market. Time for bulls to start celebrating? Yes, but with a less vigorous approach. Why?
There are a few technical reasons:
1) volumes (not shown) accompanying the breakout on Mon. Jun 9 were moderate - not sufficiently strong to technically validate the breakout; 2) the index has moved a bit far above its 20 day EMA, which is a sign of an overbought condition; 3) negative divergences visible on MACD and RSI, which touched lower tops than their May '18 tops, while the index has moved higher; 4) today's trading has formed a 'doji' candlestick that may be part of a bearish 'evening star' pattern (which will get confirmed only if tomorrow's trading forms a bear candle).
As often happens after a breakout, a pullback towards the down trend line can be expected. Can the pullback cause the index to drop below the down trend line? The possibility can't be ruled out at this stage.
Daily technical indicators are bullish, and looking overbought. MACD has crossed above its signal line, and rising towards overbought zone. RSI is also rising towards its overbought zone, but its upward momentum has reduced. Slow stochastic is well inside its overbought zone, and can trigger a pullback towards the down trend line.
Nifty's TTM P/E has moved up to 27.2 - which is much higher than its long-term average and in overbought zone. The breadth indicator NSE TRIN (not shown) is falling in neutral zone, and may limit near-term index up side.
Trump has announced more tariff's on Chinese imports. FIIs are fleeing Asian emerging markets. Oil's price remains high, and can go higher. Rupee is tumbling against the US Dollar, and RBI is forced to sell Dollars to prevent a Rupee free fall. Inflation is rising, and interest rates will follow. Lots of IPOs are in the pipeline.
The macro environment is not conducive for a sustained bull rally. Stay invested, but don't feel euphoric about this week's Nifty breakout.
(Note: Planning to add quality mid-cap and small-cap stocks to your portfolio? Subscribe to my Monthly Investment Newsletter. Paid subscriptions are being offered to blog visitors, followers and subscribers till Jul 21, 2018. Contact me at mobugobu@yahoo.com for details.)
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