In a holiday-shortened trading week, FIIs were net buyers of equity on Fri. Aug 17, but net sellers on Mon., Tue. and Thu. (Aug 13, 14, 16). Their total net selling was worth Rs 20.3 Billion. DIIs were net buyers of equity on all four trading days. Their total net buying was worth Rs 8.9 Billion, as per provisional figures.
Income tax collection in India during FY 2017-18 was at a record Rs 10 Trillion. A record number of 69.2 million tax returns were filed, which was 13.1 million more than those filed in FY 2016-17.
There has been a steep decline in India's household savings rate - from 23.6% to 16.3% during fiscals 2012 to 2017, as per a report by India Ratings. The decline was primarily due to shocks from high-value note ban and GST implementation.
BSE Sensex index chart pattern
On Mon. Aug 13, the daily bar chart pattern of Sensex breached the up trend line (marked '2') drawn from the Jun 28 low. For the rest of the holiday-shortened week, the index made gradual upward progress - gaining 0.2% on a weekly closing basis - but remained below up trend line '2'.
The index is trading above its three rising EMAs in a bull market. Breach of a steep up trend line ('2') by a sideways movement may be a warning of an impending correction, but is not necessarily bearish.
As long as the index remains above the slightly longer-term up trend line ('1') drawn from the Mar 23 low, bulls need not worry. Incidentally, the current level of up trend line '1' is almost the same as the Jan 29 top of 36444. So, it should provide strong support in case Sensex does correct.
Daily technical indicators have corrected overbought conditions but remain in bullish zones. MACD has crossed below its signal line. ROC has crossed above its falling 10 day MA. RSI is sliding down. Slow stochastic is moving up. All four are showing negative divergences by falling below their Aug 2 lows - hinting at some correction or consolidation.
This is not a good time to look for new stock ideas. If you have spareable surplus that you are ready to invest, slowly add to your existing portfolio. Alternatively, wait for dips to add.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty breached the up trend line drawn from the Jun 29 low intra-week, but managed to close above it at a new high of 11471, with a weekly gain of 0.4%.
The breach was not a convincing one as the index did not close below the up trend line. But it may be a warning of an impending correction. The index is trading well above its two rising weekly EMAs in a bull market.
Weekly technical indicators are inside their overbought zones. MACD is rising above its signal line. ROC and RSI are moving sideways with slight downward biases. Slow stochastic is also moving sideways.
An index can remain overbought for long periods. However, some correction or consolidation will improve the technical 'health' of the chart and enable the index to climb higher.
Nifty's TTM P/E has moved up to 28.11, which is in overbought territory and well above its long-term average. The breadth indicator NSE TRIN (not shown) is moving down towards its overbought zone, and can limit index upside.
Bottomline? Bulls remain in complete control of Sensex and Nifty charts. Overbought conditions and divergences on technical indicators can trigger some correction or consolidation. High oil prices, a falling Rupee, a worsening trade deficit, economic turmoil in Turkey comprise a wall of worries which both indices are trying to climb. Stay cautiously optimistic.
Income tax collection in India during FY 2017-18 was at a record Rs 10 Trillion. A record number of 69.2 million tax returns were filed, which was 13.1 million more than those filed in FY 2016-17.
There has been a steep decline in India's household savings rate - from 23.6% to 16.3% during fiscals 2012 to 2017, as per a report by India Ratings. The decline was primarily due to shocks from high-value note ban and GST implementation.
BSE Sensex index chart pattern
On Mon. Aug 13, the daily bar chart pattern of Sensex breached the up trend line (marked '2') drawn from the Jun 28 low. For the rest of the holiday-shortened week, the index made gradual upward progress - gaining 0.2% on a weekly closing basis - but remained below up trend line '2'.
The index is trading above its three rising EMAs in a bull market. Breach of a steep up trend line ('2') by a sideways movement may be a warning of an impending correction, but is not necessarily bearish.
As long as the index remains above the slightly longer-term up trend line ('1') drawn from the Mar 23 low, bulls need not worry. Incidentally, the current level of up trend line '1' is almost the same as the Jan 29 top of 36444. So, it should provide strong support in case Sensex does correct.
Daily technical indicators have corrected overbought conditions but remain in bullish zones. MACD has crossed below its signal line. ROC has crossed above its falling 10 day MA. RSI is sliding down. Slow stochastic is moving up. All four are showing negative divergences by falling below their Aug 2 lows - hinting at some correction or consolidation.
This is not a good time to look for new stock ideas. If you have spareable surplus that you are ready to invest, slowly add to your existing portfolio. Alternatively, wait for dips to add.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty breached the up trend line drawn from the Jun 29 low intra-week, but managed to close above it at a new high of 11471, with a weekly gain of 0.4%.
The breach was not a convincing one as the index did not close below the up trend line. But it may be a warning of an impending correction. The index is trading well above its two rising weekly EMAs in a bull market.
Weekly technical indicators are inside their overbought zones. MACD is rising above its signal line. ROC and RSI are moving sideways with slight downward biases. Slow stochastic is also moving sideways.
An index can remain overbought for long periods. However, some correction or consolidation will improve the technical 'health' of the chart and enable the index to climb higher.
Nifty's TTM P/E has moved up to 28.11, which is in overbought territory and well above its long-term average. The breadth indicator NSE TRIN (not shown) is moving down towards its overbought zone, and can limit index upside.
Bottomline? Bulls remain in complete control of Sensex and Nifty charts. Overbought conditions and divergences on technical indicators can trigger some correction or consolidation. High oil prices, a falling Rupee, a worsening trade deficit, economic turmoil in Turkey comprise a wall of worries which both indices are trying to climb. Stay cautiously optimistic.
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