FIIs were net sellers of equity on Mon. (Dec 17) but net buyers on Tue. & Wed. (Dec 18 & 19). Their total net buying was worth Rs 12.9 Billion. DIIs were net sellers on all three days. Their total net selling was worth Rs 7.4 Billion, as per provisional figures.
Hong Kong based billionaire businessman Victor Fung has said that India has a window of opportunity in the midst of US-China trade war. The trade imbalance between China and India will get corrected as Chinese consumption of Indian goods increases.
Due to demonetisation, the cost of printing currency notes escalated to Rs 79.65 Billion in FY 2016-17 from Rs 34.21 Billion in FY 2015-16, as per a written reply to the Rajya Sabha by the Finance Minister.
FII buying extended the counter-trend rally on the daily bar chart pattern of Nifty. The index had consolidated inside the Oct 4 downward 'GAP' on Thu. & Fri. (Dec 13 & 14). On Mon. Dec 17, it moved above the 'GAP' once again and rose further to close at 10967 today - its highest close since Oct 1.
The 20 day and 50 day EMAs are above the 200 day EMA, and the index is trading above all three EMAs in bull territory. Analysts have started predicting new highs for the index. Small-cap and mid-cap stocks have started to move up, which is a sign of participation by retail investors.
Bulls should keep their celebrations on hold, as they still have a lot of work left before they can regain control of the chart. Fundamentally, the market has received a sentiment boost due to the sharp fall in oil prices, and a consequent strengthening of the Rupee against the US Dollar.
That is not the only reason for FII buying. This is the time for annual 'NAV management'. Foreign funds tend to buy beaten down index stocks to increase their year-end NAVs. Their buying may not sustain for long.
There are technical headwinds as well. Daily technical indicators are in bullish zones, but MACD and RSI are showing negative divergences by touching lower tops. Slow stochastic is well inside its overbought zone, and can trigger a correction.
Note that the index is trading inside a 'resistance zone' between 10882 and 11090, which are the 50% and 61.8% Fibonacci retracement levels respectively of the 1756 points fall from the Aug 28 top (11760) to the Oct 26 low (10004). Only a convincing index move above 11090 can restore control to bulls.
Nifty's TTM P/E has moved up to 26.53 - its highest level since Oct 1, and much higher than its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is plummeting in neutral zone and can limit near-term index upside.
On the daily closing/line chart (not shown), Nifty is trading within a large bearish 'rising wedge' pattern, with the upper edge of the 'wedge' near 11000. Expect bears to start selling as the index approaches 11000.
Falling oil prices and lower inflation may be great for Indian consumers, but may not be good indicators of economic growth. If you are holding long positions, taking some profits home may be a good idea.
Hong Kong based billionaire businessman Victor Fung has said that India has a window of opportunity in the midst of US-China trade war. The trade imbalance between China and India will get corrected as Chinese consumption of Indian goods increases.
Due to demonetisation, the cost of printing currency notes escalated to Rs 79.65 Billion in FY 2016-17 from Rs 34.21 Billion in FY 2015-16, as per a written reply to the Rajya Sabha by the Finance Minister.
FII buying extended the counter-trend rally on the daily bar chart pattern of Nifty. The index had consolidated inside the Oct 4 downward 'GAP' on Thu. & Fri. (Dec 13 & 14). On Mon. Dec 17, it moved above the 'GAP' once again and rose further to close at 10967 today - its highest close since Oct 1.
The 20 day and 50 day EMAs are above the 200 day EMA, and the index is trading above all three EMAs in bull territory. Analysts have started predicting new highs for the index. Small-cap and mid-cap stocks have started to move up, which is a sign of participation by retail investors.
Bulls should keep their celebrations on hold, as they still have a lot of work left before they can regain control of the chart. Fundamentally, the market has received a sentiment boost due to the sharp fall in oil prices, and a consequent strengthening of the Rupee against the US Dollar.
That is not the only reason for FII buying. This is the time for annual 'NAV management'. Foreign funds tend to buy beaten down index stocks to increase their year-end NAVs. Their buying may not sustain for long.
There are technical headwinds as well. Daily technical indicators are in bullish zones, but MACD and RSI are showing negative divergences by touching lower tops. Slow stochastic is well inside its overbought zone, and can trigger a correction.
Note that the index is trading inside a 'resistance zone' between 10882 and 11090, which are the 50% and 61.8% Fibonacci retracement levels respectively of the 1756 points fall from the Aug 28 top (11760) to the Oct 26 low (10004). Only a convincing index move above 11090 can restore control to bulls.
Nifty's TTM P/E has moved up to 26.53 - its highest level since Oct 1, and much higher than its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is plummeting in neutral zone and can limit near-term index upside.
On the daily closing/line chart (not shown), Nifty is trading within a large bearish 'rising wedge' pattern, with the upper edge of the 'wedge' near 11000. Expect bears to start selling as the index approaches 11000.
Falling oil prices and lower inflation may be great for Indian consumers, but may not be good indicators of economic growth. If you are holding long positions, taking some profits home may be a good idea.
2 comments:
Dear Sir,
Would you care to elaborate what you mean by "If you are holding long positions, taking some profits home may be a good idea."?
It was a suggestion to book partial profits on existing holdings, as Nifty seemed poised to resume its corrective move.
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