FIIs were net sellers of equity on Mon. and Tue. (Nov 18 and 19), but were net buyers during Wed. through Fri. (Nov 20-22). Their total net buying was worth Rs 47.1 Billion. DIIs were net buyers of equity on Mon. through Wed., but were net sellers on the last two days. Their total net buying was worth Rs 3.3 Billion.
India's urban unemployment rate during Jan-Mar '19 dropped to 9.3% from 9.9% during Oct-Dec '18. Unemployment among 15-29 year olds was 22.5% during Jan-Mar '19 against 23.7% during Oct-Dec '18.
According to a report by CEAMA, India's appliances and consumer electronics market size is expected to nearly double to Rs 1.48 Trillion by FY 25 from Rs 764 Billion in FY 19.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex has been consolidating sideways within a 'rectangle' pattern for the past three weeks. The entire consolidation has taken place above the three rising EMAs in a bull market. So, the expected index breakout from the 'rectangle' is upwards.
However, a 'rectangle' is an unreliable pattern that can sometimes act as a 'reversal' pattern. A downward breakout from the pattern is a possibility that should not be ignored. The zone between 39450 and 39250 can act as a support on the downside.
Daily technical indicators are showing downward momentum. MACD crossed below its rising signal line and has slipped down from its overbought zone. ROC is below its falling 10 day MA and has dropped into bearish zone. RSI and Slow stochastic are falling towards their respective 50% levels.
Note that all four indicators are showing negative divergences by moving down while the the index is consolidating sideways and three EMAs are moving up. That can trigger some correction or more sideways index consolidation.
Of late, market experts have been talking about overvalued quality stocks and pockets of value among mid-cap and small-cap stocks. Small investors would do well to ignore such talk. During economic slowdowns, smaller companies and their stocks tend to underperform.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty gained about 19 points and closed well above its three rising EMAs in a long-term bull market. However, the index is struggling to close above the psychological 12000 level, and may have formed a small 'double top' reversal pattern.
Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line in bullish zone. ROC has started to slide down inside its overbought zone. RSI is moving sideways just below the edge of its overbought zone. Slow stochastic is moving sideways inside its overbought zones. More index consolidation or some correction is possible.
Nifty's TTM P/E has moved up to 27.77 - which is well above its long-term average inside overbought zone. The breadth indicator NSE TRIN (not shown) is oscillating in neutral zone, hinting at more near-term index consolidation.
Bottomline? Sensex and Nifty charts are consolidating sideways above their rising daily and weekly EMAs in long-term bull markets. Both indices are close to their lifetime highs, which is not a good time to buy.
FIIs were net sellers of equity on Mon. and Tue. (Nov 18 and 19), but were net buyers on Wed. (Nov 20). Their total net selling was worth Rs 6.2 Billion. DIIs were net buyers of equity on on all three trading days. Their total net buying was worth Rs 7.5 Billion, as per provisional figures.
Economists at SBI, Capital Economics and Nomura have lowered their Q2 (Sep '19) GDP growth forecasts to figures between 4.2% and 4.7%. Q2 GDP data will be published on Nov 29.
The government remains in denial. Jr Finance Minister stated in Parliament that there is no 5% GDP growth slowdown and the government has no intention of revising the fiscal deficit target.
The daily bar chart pattern of Nifty has been consolidating sideways within a 'rectangle' pattern for the past three weeks. The index is still struggling to cross above the 12000 level in a convincing manner.
A 'rectangle' usually acts as a 'continuation' pattern. Since the index is trading above its three rising EMAs in a bull market, the likely breakout from the 'rectangle' is upwards.
However, a 'rectangle' is also an unreliable pattern. That means, a downward breakout can't be ruled out. It may be prudent to wait for the breakout before taking any buy/sell decision.
Daily technical indicators are in bullish zones, but not showing much upward momentum. MACD is moving sideways below its falling signal line. RSI is gradually moving up towards its overbought zone. Slow stochastic is also moving sideways.
All three indicators are showing negative divergences by failing to move up towards their previous highs. Some more consolidation within the 'rectangle', or a correction towards 11700 is possible.
Nifty's TTM P/E has moved down to 27.23, which remains well inside its overbought zone and much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is moving down sharply in neutral zone, and may limit near-term index upside.
The index rally during the past couple of days has been narrow, and led mainly by a spurt in the price of RIL. Caution is advised for those who are getting ready to jump into the market.
In a holiday-curtailed trading week, FIIs were net buyers of equity on Mon. and Wed. (Nov 11 and 13), but were net sellers during Thu. and Fri. (Nov 14 and 15). Their total net selling was worth Rs 3.2 Billion. DIIs were net sellers of equity on Mon. and Wed., but were net buyers on the last two days. Their total net selling was worth Rs 5.1 Billion.
The macroeconomic indicators are hinting at deeper trouble. IIP contracted 4.3% in Sep '19 to its lowest level in 8 years. CPI inflation rose 4.62% in Oct '19 - to a 16 months high. WPI inflation eased to 0.16% in Oct '19 - to a 3 years low due to a fall in prices of fuel, power and manufactured goods.
Exports contracted 1.11% to US $26.38 Billion in Oct '19, while imports fell 16.31% to $37.39 Billion, leaving a lower trade deficit of $11 Billion against $18 Billion in Oct '18. Consumer spending fell for the first time in 4 decades in FY 2017-18 - driven by slack rural demand - according to a survey by NSO, which the government has decided to suppress.
BSE Sensex index chart pattern
After touching new intra-day and closing highs a week ago, the daily bar chart pattern of Sensex consolidated sideways with a slight downward bias. The index is trading above its three rising EMAs in a bull market, and gained 33 points on a weekly closing basis.
Daily technical indicators are giving conflicting signals. MACD has crossed below its rising signal line inside its overbought zone. ROC has dropped to its neutral zone. RSI is moving sideways along the edge of its overbought zone. Slow stochastic has slipped down from its overbought zone. Some more index consolidation or correction is likely.
On the daily closing Sensex and BSE 500 charts (not shown), last week's trading showed breakouts below small 'head and shoulders' patterns followed by pullbacks to the 'necklines' of the patterns. A correction below the 20 day EMA is a possibility.
Q2 (Sep '19) results of India Inc. showed a marginal drop in revenues - the first decline in 9 quarters - due to slower demand, de-stocking of inventories and a higher base effect. However, net profits grew in double digits, thanks to the tax rate cut for companies.
The stock market seems worried about the Q2 (Sep '19) GDP number, which may drop below 5%. FIIs may have turned net sellers on Thu. and Fri. in anticipation of a low number. Best to sit on the sidelines for now.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty consolidated with a downward bias below the psychological 12000 level during the week. The index lost 13 odd points on a weekly closing basis, but traded well above its three weekly EMAs in a long-term bull market.
Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line in bullish zone. RSI is facing resistance from the edge of its overbought zone. ROC and Slow stochastic are moving sideways inside their respective overbought zones. Some more index consolidation or correction is possible.
Nifty's TTM P/E has slipped down to 27.32 - which is well above its long-term average inside overbought zone. The breadth indicator NSE TRIN (not shown) is oscillating in neutral zone, hinting at more near-term index consolidation.
Bottomline? Sensex and Nifty charts are consolidating well above their rising daily and weekly EMAs in long-term bull markets. Both indices are close to their lifetime highs. Stay invested, but this is not a good time to buy - unless you are adept at stock picking.
FIIs were net sellers of equity on Mon. Nov 4, but were net buyers during the next four days. Their total net buying was worth Rs 32.0 Billion. DIIs were net sellers of equity during all five trading days of the week. Their total net selling was worth Rs 44.3 Billion.
Net inflows into equity funds during Oct '19 fell 10.25% to Rs 60.4 Billion from Rs 67.3 Billion in Sep '19. On a YoY basis, it fell 52.1% from Rs 126.2 Billion in Oct '18.
The bull rally in the market stalled after twin shocks from Moody's and Nomura. Moody's downgraded India's credit rating outlook to 'negative' from 'stable' - reflecting lower policy effectiveness and a gradual rise in debt. Nomura cut India's GDP forecast for FY 2019-20 to 4.9% from the earlier 5.7%.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex touched new closing (40421 on Nov 7) and intra-day (40749 on Nov 8) highs during the week on the back of strong FII buying. The index closed well above its three rising EMAs in a bull market.
However, on Fri. Nov 8, the index formed a 'reversal day' bar (higher high, lower close) that often marks an intermediate top. Twin downgrades by Moody's and Nomura triggered profit booking.
Daily technical indicators are correcting overbought conditions. MACD is above its rising signal line inside its overbought zone, but is turning down. ROC and RSI have dropped to the edges of their respective overbought zones. Slow stochastic has started sliding down inside its overbought zone. Some more index correction or consolidation is likely.
Investors are flocking to a few quality large-cap stocks. That has boosted the index to a new high. Mid-cap and small-cap stocks are still struggling. Macroeconomic indicators continue to weaken.
Despite government pronouncements, there is no reason to believe that all is well with India's economy. The decimation of rural and unorganised sectors (thanks to demo and GST) and periodic efforts at bringing foreign investors and companies to heel have ruined India's investment climate.
Under the circumstances, staying invested and starting a SIP in an index fund/ETF may be the sane thing to do. Revival in mid-cap and small-cap stocks is not likely to happen anytime soon.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty rose above the psychological 12000 level during the week, but fell short of its lifetime high of 12103. Though the index gained 17 odd points on a weekly closing basis, it failed to close above 12000.
Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line in bullish zone. RSI has climbed to the edge of its overbought zone. ROC and Slow stochastic are well inside their respective overbought zones, but are showing signs of correcting. Some index consolidation or correction is likely.
Nifty's TTM P/E touched a high of 27.75 on Thu. Nov 7 before slipping down to 27.51 - which is well above its long-term average inside overbought zone. The breadth indicator NSE TRIN (not shown) has dropped sharply towards the edge of its overbought zone. More near-term index consolidation is possible.
Bottomline? Sensex and Nifty charts are trading well above their rising daily and weekly EMAs in long-term bull markets. Both indices are close to their lifetime highs. Stay invested. Try to avoid bottom-fishing in beaten-down stocks.
FIIs were net sellers of equity on Mon. Nov 4, but were net buyers during the next two trading days this week. Their total net buying was worth Rs 13.5 Billion. DIIs were net sellers of equity on on all three trading days. Their total net selling was worth Rs 32.1 Billion, as per provisional figures.
Nikkei India's Services PMI rose to 49.2 in Oct '19 from 48.7 in Sep '19, but remained below 50 (indicating contraction) for the second straight month. The Composite (Manufacturing + Services) PMI dropped to a 2 year low of 49.6 - pointing to further weakness in India's economy.
Four major Indian drug makers - Cadila (Moraiya plant), Glenmark (Baddi plant), Lupin (Mandideep plus two other plants), Aurobindo (two Hyderabad plants) - have received warning letters from US FDA, showing a hardening stance towards lapses in quality control.
The daily bar chart pattern of Nifty is trying to continue its rally towards a new high on the back of FII buying. However, selling by DIIs has kept the upward march of the index in check.
The index is struggling a bit to overcome resistance from the 12000 level while it trades well above its three rising EMAs in a bull market. The previous (Jun 3) top of 12103 is within touching distance.
Daily technical indicators are looking overbought. MACD is rising above its signal line inside overbought zone. RSI is moving sideways along the edge of its overbought zone. Slow stochastic is also moving sideways, inside its overbought zone. Some consolidation or a correction towards 11700 is possible.
Nifty's TTM P/E has moved up to 27.71, which is well inside its overbought zone and much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is moving up in neutral zone, and may limit near-term index upside.
India's economy is heading southwards - as is evident from most macroeconomic indicators. But Nifty is moving north on expectations of more reforms.
Unless banks become more realistic about narrowing their spreads on loans, economic growth revival will remain a distant dream. Periodic reform announcements are boosting short-term bullish sentiments in the market, but neither helping rural distress nor encouraging consumption.
This is not the time to be brave. Stay invested, carry on with investment plans but avoid large bets on 'cheap' stocks.
For the month of Oct '19, FIIs were net buyers of equity after five straight months of net selling. Their total net buying was worth Rs 85.9 Billion. DIIs were net buyers of equity for the sixth month in a row. Their total net buying was worth Rs 47.6 Billion.
Confluence of major festivals and big discounts failed to bring much cheer to auto makers during Oct '19. Maruti and Volkswagen showed marginal sales growth over Oct '18. Renault showed good gains. Hyundai and Toyota showed single-digit de-growth. The rest - cars, 2-wheelers, CVs - showed double-digit de-growth.
IHS Markit India's Manufacturing PMI slipped to a 2-year low of 50.6 in Oct '19 from 51.4 in Sep '19. (A number above 50 indicates expansion.) GST collection in Oct '19 was Rs 954 Billion, which was 3.8% higher than Sep '19 figure of Rs 919 Billion but 5.3% lower than Rs 1.01 Trillion collected in Oct '18.
As per CMIE, India's unemployment rate in Oct '19 climbed to 8.5% - the highest since Aug '16 - from 7.2% in Sep '19. A thriving economy has been brought to its knees by a poorly planned demonetisation and a hastily implemented GST.
BSE Sensex index chart pattern
Bulls came charging out of the gate after the Diwali break. The daily bar chart pattern of Sensex broke out convincingly above the (blue) down trend line on Tue. Oct 29, and rose to touch a new intra-day high of 40392 on Oct 31.
Bulls failed to press home their advantage despite strong equity buying by FIIs. By the end of the week, the index formed a small bearish 'rounding top' pattern that can trigger a correction.
Daily technical indicators are in overbought zones. MACD and RSI are showing upward momentum. ROC and Slow stochastic are showing slight downward momentum. ROC touched a lower top when the index touched a new high. Some near-term index consolidation or a pullback towards the down trend line is likely.
All three EMAs are rising, and the index is trading above them in a bull market. However, the index failed to close above its Jun 3 '19 life-time closing high of 40268 despite touching a new intra-day high of 40392. Bears may use the opportunity to launch an attack.
Profit booking can be expected when an index approaches a previous high. Investors remember what happened after the previous high was touched. Cautious optimism should be the key words here - not aggressive bullishness.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty closed convincingly above the (blue) down trend line on the back of strong FII buying. FIIs and DIIs had turned net sellers of equity a week ago, causing the index to pullback to the down trend line. Such pullbacks often provide buying opportunities.
However, the index is trading close to a lifetime high. It is a good idea to become fearful when everyone else is turning greedy. The weak macroeconomic indicators are suggesting that the market is running ahead of itself.
Weekly technical indicators are looking bullish and overbought. MACD and RSI are rising in their respective bullish zones. ROC and Slow stochastic are well inside their respective overbought zones. Some index consolidation or correction may be around the corner.
Nifty's TTM P/E has moved up to 27.47 - which is well above its long-term average inside overbought zone. The breadth indicator NSE TRIN (not shown) is treading water in neutral zone. Near-term index consolidation is a possibility.
Bottomline? Sensex and Nifty charts appear to have reversed 5 months long down trends. A cut in corporate taxes leading to better Q2 earnings has boosted bullish sentiments. Topline growth is tepid, and macroeconomic indicators remain weak. Stay invested. If you must buy, pick market-leading large-cap stocks.
