Sunday, June 30, 2019

Sensex, Nifty charts (Jun 28, 2019): bears trying to keep bulls in check

FIIs were net buyers of equity during the first three days, but turned net sellers on the last two days. Their total net buying was worth Rs 9.6 Billion. DIIs were net sellers of equity on Wed. (Jun 26), but net buyers on the other four days. Their total net buying was worth Rs 16.9 Billion, as per provisional figures.

For the month of Jun '19, FIIs were net sellers of equity worth Rs 6.9 Billion. It was their  second straight month of net selling after being net buyers during Jan-Apr '19. DIIs were net buyers of equity worth Rs 36.4 Billion during Jun '19. It was their second straight month of net buying after being net sellers during Feb-Apr '19.

India's fiscal deficit during Apr-May '19 stood at Rs 3.66 Trillion, which touched 52% of the budget estimate for FY 2019-20. The deficit was at 55.3% of the budget estimate for FY 2018-19 during Apr-May '18.

Current account deficit (CAD) during Jan-Mar '19 narrowed sharply to US $4.6 Billion from $17.7 Billion during Oct-Dec '18, and $13 Billion during Jan-Mar '18 - due to a lower trade deficit and strong Foreign Portfolio inflows. However, trade deficit for FY 2018-19 increased to $180.3 Billion from $160 Billion in FY 2017-18.

BSE Sensex index chart pattern




The daily bar chart pattern of Sensex consolidated sideways with an upward bias during the week. It bounced up after getting good support from its 50 day EMA on Tue. Jun 25, and closed above its 20 day EMA.

On Thu. Jun 27, it touched a high of 39817 - its highest level in two weeks - but formed a small 'reversal day' bar (higher high, lower close). Profit booking on the last trading day of the month dropped the index to its 20 day EMA. 

Sensex closed well above its rising 200 day EMA in a bull market, and gained 200 points (0.5%) on a weekly closing basis.

Daily technical indicators are looking neutral to bearish. MACD is sliding below its falling signal line in bullish zone. ROC is facing resistance from its '0' line after crossing above its 10 day MA. RSI has dropped down after facing resistance from its 50% level. Slow stochastic has just about managed to cross above its 50% level. 

Some more consolidation is likely. The impending budget is causing some jitters in the market, leading to increased volatility. 

In case the budget on June 5 belies market expectations, a part or complete filling of 'Gap 2' (formed on May 20) may be on the cards. Stay cautiously optimistic.

NSE Nifty index chart pattern




The weekly bar chart pattern of Nifty closed about 65 points higher with a weekly gain of 0.55%, after closing lower for three straight weeks. The index has closed above the upward 'gap' (formed on May 20) for six weeks in a row.

By trading above its weekly EMAs and the up trend line, Nifty has remained in a bull market despite six weeks of sideways consolidation.

Weekly technical indicators are looking neutral to bearish. MACD has slipped down to merge with its signal line at the edge of its overbought zone. ROC is below its 10 week MA and has dropped to its neutral zone. RSI and Slow stochastic have dropped from their respective overbought zones, but remain in bullish zonesSome more consolidation or correction is likely. 

Nifty's TTM P/E has moved down to 28.98, which is still well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has re-entered its oversold zone, hinting at near-term index consolidation.

Bottomline? Sensex and Nifty charts have been consolidating after touching lifetime highs. Any pre-budget rally can be used to book profits. Avoid bottom fishing among small/mid caps. Stick to quality large-caps.

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