In a holiday-shortened trading week, FIIs were net sellers of equity on Tue. and Thu. (Dec 24 and 26) but net buyers on Mon. and Fri. (Dec 23 and 27). Their total net buying was worth Rs 9.3 Billion. DIIs were net sellers of equity on Mon. and Tue., but were net buyers on Thu. and Fri. Their total net selling was worth Rs 20.5 Billion - as per provisional figures.
With tax and non-tax revenues lagging way behind targets, along with weaker private consumption and investments, RBI expects a threat to overall fiscal numbers - even as India's financial system remains resilient.
Despite the economic slowdown and weak consumer sentiment across consumer goods, retail and other industry sectors, the Indian eCommerce industry grew 38% to US $76 Billion in 2019.
BSE Sensex index chart pattern
After touching a lifetime high of 41810 on Dec 20, the daily bar chart pattern of Sensex slipped down to test support from its rising 20 day EMA, and bounced up to close just around 100 points (0.25%) lower on a weekly basis. The index is trading above its three rising EMAs in a bull market.
Daily technical indicators are in bullish zones but not showing much upward momentum. MACD is seeking support from its rising signal line. ROC has bounced up after receiving support from its rising 10 day MA. RSI has risen to the edge of its overbought zone. Slow stochastic has slipped down from its overbought zone.
FII trading activity usually slows down during Christmas-New Year holiday season. So, volatility may reduce next week, as the stock market tries to anticipate Q3 (Dec '19) results.
The index can attempt to move higher, but without FII buying and broader market participation the rally may not make much headway. Stay invested, but maintain trailing stop-losses in case there is any sudden market turnaround.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty has been trading within a large 'rising wedge' pattern for the past 14 weeks. Such a pattern has bearish implications - particularly when it forms at an index top. Falling volumes during the past few weeks is another concern for bulls.
Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line and is poised to enter overbought zone. ROC has crossed below its 10 week MA and dropped to the edge of its overbought zone. RSI has also dropped to the edge of its overbought zone. Slow stochastic is moving up inside its overbought zone. Bulls seem to be in complete control.
Nifty's TTM P/E has slipped down to 28.48 - which remains well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has risen sharply to enter its oversold zone, and can trigger some near-term index consolidation.
Bottomline? Sensex and Nifty charts have slipped down a bit on year-end profit booking after touching lifetime highs. Rising CPI inflation, poor GDP and IIP numbers, a crisis of confidence among consumers and nationwide protests against the Citizen Amendment Act (CAA) do not justify a soaring stock market. Stay invested, but maintain trailing stop-losses.
[Wishing all blog readers, followers, and subscribers a happy and prosperous New Year.]
FIIs were net buyers of equity on all five trading days. Their total net buying was worth Rs 48.9 Billion. DIIs were net sellers of equity on all five trading days. Their total net selling was worth Rs 37.5 Billion - as per provisional figures.
According to a CARE Ratings report, production of consumer non-durables (i.e. FMCG products) moderated to 4% in FY 2018-19 from 10.5% growth in FY 2017-18 due to a sluggish economy and limited growth in employment. However, 14 items among the 36 taken into consideration showed increase in growth.
Fitch Ratings have cut India's GDP growth forecast to 4.6% for FY 2019-20 from the previous estimate of 5.6% due to significant growth deceleration in the past few quarters - thanks to credit squeeze and deterioration in business and consumer confidence.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex rose to touch new intra-day (41810) and closing (41682) highs during the week on the back of strong buying in equities by FIIs. The index is trading well above its three rising EMAs in a bull market.
Daily technical indicators are looking bullish and a bit overbought. MACD has crossed above its signal line in bullish zone. ROC has crossed above its 10 day MA and entered its overbought zone. RSI is hovering just below the edge of its overbought zone. Slow stochastic is well inside its overbought zone, and can trigger a correction or some consolidation.
Bull markets are supposed to climb 'a wall of worries' - and there are plenty of worries for Indian investors. Apart from a sliding economy and rising inflation with a possibility of stagflation, divisive forces have now been unleashed by the government's determined effort to implement CAA and NRC.
That may be a great tactic to win votes in upcoming state elections after a few recent setbacks and divert the nation's attention from gross mismanagement of the economy. But nationwide protests have added to the fear and uncertainty that have already damaged business and consumer confidence.
The lack of buying euphoria is an indication that Sensex may climb even higher. But without investor participation in the broader market (i.e. mid-cap and small-cap stocks), the rally in a few large-cap stocks will peter out sooner than later. Hold on to good large-cap stocks, but avoid buying them at current elevated valuations.
NSE Nifty index chart pattern
After struggling for three weeks, the weekly bar chart pattern of Nifty broke out and closed above its Jun 7 top of 12103, and touched new intra-week (12294) and closing (12272) highs.
The index is trading well above its three rising weekly EMAs in a long-term bull market, and gained 185 points (1.5%) on a weekly closing basis. However, small investors should not get carried away by a rising index.
Note that Nifty has been trading within a large 'rising wedge' pattern for the past three months. Such a pattern has bearish implications - particularly when it forms at an index top. Falling volumes during the past three weeks is another concern for bulls.
Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line in bullish zone. ROC has crossed above its 10 week MA to re-enter its overbought zone. RSI has bounced up from the edge of its overbought zone. Slow stochastic is moving sideways inside its overbought zone. Bulls appear to be in complete control.
Nifty's TTM P/E has moved up to 28.57 - its highest level for the month and well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has plunged inside its overbought zone, and can trigger some near-term index consolidation or correction.
Bottomline? Sensex and Nifty charts have touched lifetime highs on the back of strong FII buying. Rising CPI inflation, poor GDP and IIP numbers, a crisis of confidence among consumers and nationwide protests against the Citizen Amendment Act (CAA) do not justify a soaring stock market. Stay invested, but book partial profits wherever available, and avoid buying near lifetime high index levels.
FIIs were net buyers of equity during the first three trading days this week. Their total net buying was worth Rs 38.1 Billion. DIIs were net sellers of equity on all three trading days. Their total net selling was worth Rs 29.7 Billion, as per provisional figures.
India's WPI-based inflation rose 0.58% in Nov '19 against 0.16% in Oct '19 due to increase in prices of food items. WPI inflation was 4.47% in Nov '18.
There are a few green shoots of revival visible in the Indian economy. During Nov '19, passenger air traffic volume rose 11.2%, fuel demand rose 10%, bitumen consumption indicated increase in road construction.
The daily bar chart pattern of Nifty rose to touch new intra-day (12237.70) and closing (12221.65) highs today (Dec 18), on the back of strong buying by FIIs. In the process, the index pierced and closed above the upper Bollinger Band.
All three EMAs are rising, and the index is trading above them in a bull market. The rally continues to be led by a few large-cap stocks, like RIL, HDFC. Mid-cap and small-cap stocks are continuing to struggle.
Daily technical indicators are looking bullish and showing upward momentum. MACD has crossed above its falling signal line in bullish zone. RSI is rising above its 50% level. Slow stochastic has entered its overbought zone.
All three indicators are showing negative divergences by touching lower tops while the index rose to touch a new high. A corrective move may follow.
Nifty's TTM P/E has moved up to 28.48 - its highest level this month, and well inside its overbought zone. After a sharp fall from its oversold zone, the breadth indicator NSE TRIN (not shown) is rising in neutral zone, hinting at some near-term index downside.
Part resolution of US-China trade dispute has encouraged bulls in global stock markets. However, a possible impeachment process of the US President can trigger some profit booking.
FIIs were net buyers of equity on Mon., Wed. and Fri. (Dec 9, 11 and 13) but were net sellers on the other two trading days. Their total net buying was worth Rs 1.3 Billion. DIIs were net buyers on all five trading days. Their total net buying was worth Rs 18.5 Billion - as per provisional figures.
India's CPI-based retail inflation rose to a 40 months high of 5.54% in Nov '19 from 4.62% in Oct '19 due to higher food prices. CPI-based inflation was 2.33% in Nov '18. The combination of falling GDP growth and rising inflation and unemployment may lead to stagflation.
For the second straight month, India's Index of Industrial Production (IIP) contracted. It was -3.8% YoY in Oct '19 - a slight improvement over -4.3% YoY in Sep '19. For the Apr-Oct '19 period, IIP was 0.5% against 5.7% during Apr-Oct '18.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex formed a 'reversal day' bar (lower low, higher close) on Wed. Dec 11 that triggered a sharp bounce above its 20 day EMA by Fri. Dec 13. FIIs turned buyers on expectation of a US-China trade deal.
The index is trading above its three daily EMAs in a bull market, and gained more than 560 points (1.4%) on a weekly closing basis.
Daily technical indicators are looking neutral to bullish. MACD is moving up towards its falling signal line in bullish zone. ROC has crossed above its 10 day MA in neutral zone. RSI and Slow stochastic are at their respective 50% levels. The index seems ready to rise to a new high.
The bull market may be entering a new upward phase after six weeks of sideways consolidation. Small investors would do well to not get sucked into it. There are very few signs of bottoming out in the economy, and most of the large-cap stocks leading the index rally are looking overvalued.
The government appears out of its depth in handling the country's self-inflicted economic woes. The hastily pushed through CAB bill - probably in an effort to manage headlines and divert attention - is having international repercussions as it has generated widespread internal protests.
Image building, vote catching, fear mongering and policy flip-flops have become the hallmarks of the current dispensation. This has generated a feeling of uncertainty among citizens, which is the exact opposite of the feel-good factor that is required to stimulate consumption and investment. For small investors, capital protection is the need of the hour.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty failed to close above its previous (Jun 7) top of 12103 for the third week in a row. The index is trading well above its three rising EMAs in a long-term bull market, and gained about 165 points (1.4%) on a weekly closing basis. It should be just a matter of time before the index rises higher.
However, the fact that the index is struggling to close above 12103 may encourage bears in the off chance that Nifty may be forming a 'double top' reversal pattern.
Such a pattern gets confirmed if volumes during formation of the second top is lower (not the case here) and if the index falls below its low of 10637 (touched on Aug 23). Looks like bulls need not worry too much about that.
Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line in bullish zone. ROC has crossed above its 10 week MA to re-enter its overbought zone. RSI has bounced up from the edge of its overbought zone. Slow stochastic is moving sideways inside its overbought zone. Bulls appear to be regaining control after a period of consolidation.
Nifty's TTM P/E has moved up to 28.17 - its highest level for the month and well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is falling inside its oversold zone, hinting at some more near-term index upside.
Bottomline? Sensex and Nifty charts have been consolidating after touching lifetime highs. Caution is advised due to rising CPI inflation, poor GDP and IIP numbers and a crisis of confidence among consumers. Stay invested, but avoid buying near lifetime high index levels.
FIIs were net buyers of equity on Mon. and Wed. (Nov 9 and 11), but were net sellers on Tue. (Nov 10). Their total net buying was worth Rs 7.0 Billion. DIIs were net buyers of equity on all three trading days. Their total net buying was worth Rs 6.5 Billion, as per provisional figures.
India's electricity demand fell 4.3% to 94.6 Billion units in Nov '19 against 98.84 Billion units in Nov '18. It was the fourth straight month of power demand decline, as per CEA. Power demand had declined 13.2% YoY in Oct '19 - the steepest monthly decline in more than 12 years, reflecting a deepening growth slowdown.
ADB has slashed India's GDP growth forecast to 5.1% in FY 2019-20 from 6.5% that was forecast earlier. For FY 2020-21, GDP growth forecast has been cut to 6.5% from 7.2% on the back of risk aversion, credit crunch, slumping consumption and rural distress.
The daily bar chart pattern of Nifty has been correcting after touching a new high of 12158.80 on Nov 28 and penetrating the upper Bollinger Band. The correction has dropped the index below the middle band (20 day SMA, marked by green dotted line).
Note that the lower Bollinger Band is at 11819 and the rising 50 day EMA is at 11777. The zone between 11777 and 11819 should provide good support to the index on the downside.
Daily technical indicators are looking bearish to neutral. MACD is moving down below its falling signal line in bullish zone. RSI is exactly at its 50% level. Slow stochastic has dropped inside its oversold zone, and may have triggered today's pullback past 11900.
Nifty's TTM P/E has slipped down to 27.76, which remains well inside its overbought zone and much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is falling inside oversold zone, hinting at some near-term index upside.
The index may be forming a 'head and shoulders' reversal pattern with a 'neckline' at 11800. The left 'shoulder' and 'head' have formed already. A technical bounce towards 12000 followed by a fall towards 11800 will complete the right 'shoulder' formation.
The right 'shoulder' hasn't formed yet - and may not form at all. However, the possibility of formation of a known reversal pattern should be treated with respect and caution. In case the pattern does play out, Nifty can move down to test support from its 200 day EMA.
FIIs were net buyers of equity on Thu. Dec 5, but net sellers on the other four trading days. Their total net selling was worth Rs 38.6 Billion. DIIs were net sellers of equity on Thu. Dec 5, but were net buyers on the other four days. Their total net buying was worth Rs 24.2 Billion - as per provisional figures.
According to ACMA, auto component sales during Apr-Sep '19 declined 10% YoY to Rs 1.79 Trillion. However, exports grew 3% to Rs 514 Billion, and after-market sales grew 4% to Rs 351 Billion.
As per a Dun & Bradstreet report, India's GDP growth is expected to remain subdued in the near future as the slowdown has deepened and is likely to remain extended for a longer period than previously anticipated.
BSE Sensex index chart pattern
After touching lifetime intra-day and closing highs on Thu. Nov 28, the daily bar chart pattern of Sensex has been in a corrective mode. Profit booking often follows a new index top. Negative divergences visible on all four technical indicators - which failed to touch new tops - had also hinted at some consolidation or correction.
The index is trading well above its rising 200 day EMA in a bull market, but closed below its 20 day EMA for the first time in two months. The long-term technical structure of the index remains bullish. However, formation of back-to-back 'rounding top' patterns is a matter of concern for those holding long positions.
Daily technical indicators are looking bearish to neutral. MACD is falling below its signal line in bullish zone. ROC has dropped to its '0' line. RSI and Slow stochastic are seeking support from their respective 50% levels. Some more near-term index correction or consolidation may follow.
The stock market had expected a 25 bps (0.25%) interest rate cut by RBI on Dec 5. By maintaining status quo and downgrading full year GDP growth, RBI stated the obvious: monetary policy alone is not going to solve the growth problem. Instead of fiscal easing that could have boosted growth, there is talk about increasing GST tax rates, which will further burden consumers. Go figure!
Sensex may be in the process of forming a 'head and shoulders' reversal pattern, with a 'neckline' at 40000. The left 'shoulder' and 'head' have formed already - but the right 'shoulder' is yet to take shape. If the pattern does play out, the minimum downside target will be 38900.
Small investors would do well to sit on the sidelines and avoid value-buying in mid-cap and small-cap stocks.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty failed to close above its previous (Jun 7) top of 12103. That was just the excuse that bears needed to go on the attack. The index lost about 135 points (1.1%) on a weekly closing basis, but traded well above its three rising EMAs in a long-term bull market.
Note that the index has formed a bullish pattern of 'higher tops, higher bottoms' during the past two years - keeping alive the long-term bull market. However, after each of the three previous index tops - in Feb '18, Aug '18, Jun '19 - Nifty corrected 11-15%. A pattern repeat can drop the index below 10800.
Weekly technical indicators are showing bearish signs. MACD is above its rising signal line in bullish zone, but its upward momentum has stalled. ROC has crossed below its 10 week MA, and dropped down from its overbought zone. RSI is seeking support from the edge of its overbought zone. Slow stochastic is moving sideways with a downward bias inside its overbought zone. Some more index correction or consolidation is possible.
Nifty's TTM P/E has moved down to 27.78 - but remains well above its long-term average inside overbought zone. The breadth indicator NSE TRIN (not shown) is rising sharply inside its oversold zone, and may limit near-term index downside.
Bottomline? Sensex and Nifty charts are undergoing corrections after touching lifetime highs. FIIs have started selling. Caution is advised due to the poor GDP number and a crisis of confidence among consumers.
FIIs have turned net sellers of equity during the first three trading days this week. Their total net selling was worth Rs 36.4 Billion. DIIs were net buyers of equity on all three trading days. Their total net buying was worth Rs 26.2 Billion, as per provisional figures.
The IHS Markit India Manufacturing PMI rose to 51.2 in Nov '19 from a two year low of 50.6 in Oct '19. A figure above 50 indicates expansion. India's GST collection rose to Rs 1.03 Trillion in Nov '19 against Rs 0.95 Trillion in Oct '19 and Rs 0.97 Trillion in Nov '18.
Passenger vehicle sales continued to disappoint. 262,892 units were sold in Nov '19 against 284,048 units in Oct '19 and 263,455 units in Nov '18. New product launches helped reduce steep double-digit decline in sales before the festive season.
For the past five weeks, the daily bar chart pattern of Nifty had been trading within a bearish 'rising wedge' pattern - from which a downward breakout occurred on Tue. Dec 3.
The index found support at its 20 day EMA, and pulled back to the lower edge of the 'wedge' on Wed. Dec 4. All three EMAs are rising, and Nifty is trading above them in a bull market.
Daily technical indicators are in bullish zones, but not showing any upward momentum. MACD is moving down below its falling signal line. RSI and Slow stochastic are falling towards their respective 50% levels.
All three indicators showed negative divergences by failing to touch new highs with the index. A breach of the 20 day EMA can lead to a fall towards the support level of 11800.
Nifty's TTM P/E is at 28.07, which is well inside its overbought zone and much higher than its long-term average. The breadth indicator NSE TRIN (not shown) has moved up sharply to enter oversold zone, hinting at some near-term index upside.
Nifty rallied during Nov '19 on the back of strong FII buying. FIIs have now turned net sellers of equity during the first three trading days of Dec '19. If they continue to sell, the index can see more down side.
The index is trading less than 1% below its lifetime high of 12159 (touched on Nov 28). Stay invested but avoid any bulk buying.
FIIs were net buyers of equity for the second month in a row during Nov '19. Their total net buying was worth Rs 129.2 Billion - their highest monthly net buying since Apr '19. DIIs were net sellers of equity during Nov '19. Their total net selling was worth Rs 79.7 Billion - their highest monthly net selling since Apr '19.
India's GDP grew 4.5% during Q2 (Sep '19) against 7% during Q2 (Sep '18) - its slowest growth rate in more than 6 years - due to degrowth in manufacturing and a drop in exports. GDP grew 4.8% in H1 (Sep '19) against 7.5% in H1 (Sep '18).
India's fiscal deficit during Apr-Oct '19 was Rs 7.2 Trillion, which is 102.4% of the budgeted target of Rs 7.03 Trillion for FY 2019-20. Net tax receipts during Apr-Oct '19 was Rs 6.83 Trillion while total expenditure was Rs 16.55 Trillion.
BSE Sensex index chart pattern
After an upward breakout above the 39450 level on Oct 29, the daily bar chart pattern of Sensex entered a period of sideways consolidation within a 'rectangle'. An expected upward breakout from the 'rectangle' occurred on Nov 25 '19.
The index then rose to touch new intra-day (41164) and closing (41130) highs on Thu. Nov 28. Profit booking on Fri. Nov 29 caused a pullback to the top of the 'rectangle'.
All three EMAs are rising, and the index is trading above them in a bull market. The pullback is providing an opportunity to add. However, some consolidation or correction may follow as all four technical indicators are showing negative divergences by failing to touch new highs with the index.
Daily technical indicators are not showing upward momentum. MACD has crossed below its signal line and has slipped down from its overbought zone. ROC has dropped to seek support from 10 day MA in neutral zone. RSI is moving sideways above its 50% level. Slow stochastic is moving sideways inside its overbought zone.
The index has been rallying for the past two months on the back of FII buying. The poor GDP growth number appears to have been 'discounted' by the stock market. Traders and investors are hoping for more reforms by the government to kick-start the economic growth engine.
However, such hopes may be belied. The current dispensation is still in denial about the extent of the economic slowdown, and does not seem to have a clear plan of action that can stimulate investments and consumption. The corporate tax cut may get used to clean up account books.
At or near an all-time index high, small investors should always remember Falstaff's statement to King Henry IV: Discretion is the better part of valour.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty broke out above the previous three weeks' consolidation range, and touched new intra-week (12159) and closing (12056) highs. The index gained about 140 points (1.2%) for the week, and closed well above its three rising EMAs in a long-term bull market.
Note that the index is yet to close above its previous (Jun 7) top of 12103, but that is a small hurdle that bulls should be able to jump over easily. That does not mean small investors should rush into the market now.
Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line in bullish zone. ROC is sliding down inside its overbought zone. RSI has entered its overbought zone. Slow stochastic is moving sideways inside its overbought zone. Some index consolidation or correction is possible.
Nifty's TTM P/E touched the month's high of 28.32 on Thu. Nov 28, but moved down to 28.10 by Fri. Nov 29 - staying well above its long-term average inside overbought zone throughout the month. The breadth indicator NSE TRIN (not shown) oscillated in neutral zone throughout the month, even as the index rallied to touch a new high.
Bottomline? Sensex and Nifty charts touched lifetime highs, and are trading above their rising daily and weekly EMAs in long-term bull markets. Both indices can rise higher if FIIs continue their buying spree. Caution is advised due to the poor GDP and fiscal deficit numbers.
