Sunday, December 29, 2019

Sensex, Nifty charts (Dec 27, 2019): slip down a bit after touching lifetime highs

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.]

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