FIIs were net buyers of equity on Mon., Wed. and Fri. (Jan 13, 15 and 17), but were net sellers on Tue. and Thu. (Jan 14 and 16). Their total net buying was worth only Rs 0.64 Billion. DIIs were net sellers of equity on all five trading days of the week. Their total net selling was worth Rs 31.0 Billion - as per provisional figures.
India's exports fell by 1.8% in Dec '19 to US $27.36 Billion against $27.86 Billion in Dec '18. Imports fell by 8.8% in Dec '19 to $38.61 Billion against $42.35 Billion in Dec '18.
Sugar mills in the country produced 10.9 Million tonnes of sugar till Jan 15th, nearly 26% lower than the 14.7 Million tonnes produced in the same period in the previous year. Production in Maharashtra and Karnataka was affected by rains.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex breached the psychological 42000 level intra-day on Thu. and Fri. (Jan 16 and 17) - touching a new high of 42064 on Fri. - but failed to close above the 42000 level.
Daily technical indicators are in bullish zones. MACD is moving sideways above its signal line. RSI is also moving sideways above its 50% level. Slow stochastic is drifting down inside its overbought zone.
Sensex is trading above its three rising EMAs in a bull market. However, all three technical indicators are showing negative divergences by failing to touch new highs with the index. Some more consolidation or correction may follow.
Q3 (Dec '19) results declared so far have been as per expectations. Bandhan Bank and RIL reported very good results. RIL's debt has ballooned to Rs 3 Trillion, which should be a matter of concern for investors and lenders.
The stock market seems to be expecting market-friendly announcements in the budget on Feb 1. Several mid-cap and small-cap stocks have started rising in anticipation. Small investors should be wary, because the current dispensation has not walked their market-friendly talk.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty had dropped sharply below a large 'rising wedge' pattern in the previous week, but had formed a 'reversal' bar (lower low, higher close) and bounced up to close inside the 'wedge'. The index traded inside the 'wedge' and touched a new intra-week (12389) and closing (12352) highs.
The index is trading well above its rising weekly EMAs in a long-term bull market. However, formation of a bearish 'rising wedge' pattern at an index top should be treated with caution. The expected breakout from a 'rising wedge' pattern is downwards.
Weekly technical indicators are looking bullish and overbought. MACD is moving sideways above its rising signal line inside its overbought zone. ROC is showing negative divergence as it has crossed below its 10 week MA and dropped from its overbought zone. RSI and Slow stochastic are moving sideways inside their respective overbought zones.
After touching a high of 28.67 at the beginning of the week, Nifty's TTM P/E has moved down a little bit to 28.61, but remains well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is rising inside its oversold zone, hinting at near-term index consolidation or some correction.
Bottomline? Sensex and Nifty charts touched new lifetime highs after brief corrections. The stock market celebrated a de-escalation in US-Iran tensions and seems to be anticipating market-friendly announcements in the forthcoming budget on Feb 1. For long-term wealth building, avoid the urge to buy near lifetime index tops.
FIIs were net buyers of equity on Mon. and Wed. (Jan 13 and 15), but were net sellers on Tue. (Jan 14). Their total net buying was worth Rs 1.9 Billion. DIIs were net sellers of equity on all three trading days this week. Their total net selling was worth Rs 24.2 Billion, as per provisional figures.
India's CPI-based retail inflation jumped to 7.35% in Dec '19 from 5.54% in Nov '19 due to soaring food prices. With most banks offering less than 7% interest on fixed deposits, real rate of return has turned negative.
WPI-based wholesale inflation has increased to 2.59% in Dec '19 from 0.58% in Nov '19. Prices of food and non-food items rose higher.
The daily bar chart pattern of Nifty touched a new high of 12374 on Jan 14th, but corrected a little bit after facing resistance from the second up trend line (marked TL 2). The index is trading above its three rising EMAs in a bull market.
Though the index appears to be climbing a wall of worries because of rising inflation and rapidly decelerating GDP growth, some bearish technical signals are visible on Nifty's chart.
Note that the first up trend line (marked TL 1) - drawn through the index lows touched on Sep 19th, Oct 9th and 25th - was breached on Nov 13th. The index continued to move higher till Nov 28th, before succumbing to profit booking and falling below its 20 day EMA.
The index bounced up after forming a 'reversal day' bar (lower low, higher close) on Dec 11th. A second trend line (TL 2) has been drawn through the Sep 19th and Dec 11th lows. Nifty touched a new high (12294) on Dec 20th. Following a few days of sideways consolidation, TL 2 was breached with a downward 'gap' on Jan 6th.
Nifty dropped below its 50 day EMA after three months, but subsequently bounced up with an upward 'gap' to rise to a new high (on Jan 14), but has been facing resistance from TL 2.
As per 'Corrective Fan Principle', breach of two up trend lines is bearish. Breach of a third up trend line (not yet drawn) usually indicates a change of trend. This hasn't happened yet - and may not happen at all - but any bearish signal at an index top should be treated with caution and respect.
Daily technical indicators are in bullish zones. MACD has crossed above its signal line. RSI is moving sideways above its 50% level. Both MACD and RSI are showing negative divergences by forming bearish patterns (lower tops, lower bottoms) while Nifty has climbed higher. Slow stochastic is well inside its overbought zone and can trigger a correction or consolidation.
After touching a high of 28.67 on Mon. Jan 13, Nifty's TTM P/E has moved down a bit to 28.63, which remains well inside its overbought zone. The breadth indicator NSE TRIN (not shown) is hovering near the edge of its oversold zone, hinting at some near-term index consolidation.
Q3 (Dec '19) results declared so far have not generated much hope of any improvement over disappointing Q2 (Sep '19) results. Small investors should remain circumspect and concentrate on preserving capital.
FIIs were net sellers of equity during the first four trading days of the week, but were net buyers on Fri. (Jan 10). Their total net selling was worth Rs 11.5 Billion. DIIs were net sellers of equity on Mon. and Fri., but were net buyers during the other three days. Their total net buying was worth Rs 12.0 Billion - as per provisional figures.
Nikkei India's Manufacturing PMI rose to 52.7 in Dec '19 from 51.2 in Nov '19. The Services PMI rose to 53.3 in Dec '19 from 52.7 in Nov '19. (A figure above 50 indicates expansion.) The Composite PMI (Manufacturing + Services) stood at 53.7 - its highest level in 5 months.
After contracting for three straight months, India's Index of Industrial Production (IIP) grew 1.8% in Nov '19 against 0.2% in Nov '18 on the back of an improving manufacturing sector. However, during Apr-Nov '19 period, IIP growth has averaged just 0.6% against 5% during Apr-Nov '18.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex fell sharply below the (blue) up trend line and its 20 day EMA on Mon. Jan 6, but found support from its 50 day EMA. After failing to cross above its 20 day EMA on Tue., the index dropped below its 50 day EMA intra-day on Wed. Jan 8, but managed to bounce up and close above it.
De-escalation of US-Iran tensions - due to the inadvertent shooting down of a Ukrainian passenger aircraft near Teheran - led to a gap-up opening above the 20 day EMA on Thu. Jan 9, followed by a pullback to the (blue) trend line on Fri. Jan 10.
Daily technical indicators are looking neutral to bullish. MACD is moving up towards its sliding signal line in bullish zone. ROC is showing negative divergence by dropping to its '0' line as the index rose on Fri. RSI is facing resistance from its 50% level. Slow stochastic has crossed above its 50% level.
Despite the improving PMI and IIP numbers, the GDP number is unlikely to improve a lot. India's economic growth is slipping below its neighbouring countries, and consumption growth is still weak.
The index is trading above its three EMAs in a bull market, but the breach of an up trend line should be treated with circumspection. A pullback to a breached up trend line is often used by bears to sell.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty dropped sharply below a large 'rising wedge' pattern within which it was trading for the previous 15 weeks, but formed a 'reversal' bar (lower low, higher close) and bounced up to close inside the 'wedge'. The index touched a new intra-week high of 12311.
The index is trading well above its rising weekly EMAs in a long-term bull market. However, formation of a bearish 'rising wedge' pattern at an index top should be a matter of concern for bulls, as bears may make another attempt at a downward breakout from the 'wedge'.
Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line and has entered its overbought zone. ROC is showing negative divergence as it is falling below its 10 week MA in bullish zone. RSI has risen sharply inside its overbought zone. Slow stochastic is moving sideways well inside its overbought zone.
Nifty's TTM P/E has moved up to 28.51, which is well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has slipped down from its oversold zone, hinting at near-term index consolidation.
Bottomline? Sensex and Nifty charts are testing their lifetime highs after brief corrections. The stock market celebrated a de-escalation in US-Iran tensions - perhaps a bit too soon. Concentrate on capital preservation, instead of looking for new ideas near all-time index tops.
FIIs were net sellers of equity on Mon., Tue. and Wed. (Dec 30, 31 and Jan 1) but net buyers on Thu. and Fri. (Jan 2 and 3). Their total net buying was worth Rs 5.0 Billion. DIIs were net sellers of equity on Fri., but were net buyers during the other four days. Their total net buying was worth Rs 0.3 Billion - as per provisional figures.
Most of the automobile manufacturers - like Hyundai, Honda, Nissan, Toyota, Tata Motors - posted negative growth in sales in Dec '19. However, Maruti and M&M showed marginal positive growth - thanks to heavy discounts and a lower base effect. Two wheeler makers like Hero Moto, Bajaj Auto, TVS Motors and Royal Enfield also posted negative sales growth.
Foreign Direct Investment (FDI) into India during Apr-Sep '19 grew 15% to US $26 Billion against $22.7 Billion during Apr-Sep '18. Sectors which attracted maximum inflows included services, computer hardware and software, telecommunications and automobiles.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex has been in an up trend - marked by blue up trend line - since Sep 20 '19, after the Finance Minister announced a cut in corporate tax rates. The up trend is still intact, thanks to twin support from the rising 20 day EMA and the trend line.
Daily technical indicators are showing downward momentum. MACD has slipped below its signal line in bullish zone. ROC has crossed below its 10 day MA and dropped to its neutral zone. RSI and Slow stochastic are moving down after failing to re-enter their respective overbought zones.
FIIs indulged in year-end profit booking, but have resumed buying in the new year. Their buying support will be crucial if the index is to rally further. However, US-Iran conflict has led to sharp rises in the prices of oil and precious metals. That can trigger a sell-off in global stock markets.
The index is trading well above its rising 200 day EMA in a bull market. However, a correction may be just around the corner. Keep a close watch on the support level of 40000. If the index bounces up from there, the rally should resume. Otherwise, a fall to the 200 day EMA is possible.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty has been trading within a large 'rising wedge' pattern for the past 15 weeks. Such a pattern has bearish implications - which means, the expected breakout from the pattern is downwards.
The index is trading well above its rising weekly EMAs in a long-term bull market. However, formation of a bearish pattern at an index top should be treated with caution and respect.
Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line and is at the edge of its overbought zone. ROC has crossed below its 10 week MA and is trying to re-enter its overbought zone. RSI has slipped down from its overbought zone. Slow stochastic is moving sideways well inside its overbought zone.
Nifty's TTM P/E has slipped down a bit to 28.44 but remains well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is inside its oversold zone, hinting at some near-term index consolidation or correction.
Bottomline? Sensex and Nifty charts are consolidating after touching lifetime highs. Rising CPI inflation, poor GDP and IIP numbers, a crisis of confidence among consumers, nationwide protests against the Citizenship Amendment Act (CAA) and US-Iran conflict are not conducive to a soaring stock market. Book partial profits, or stay invested with trailing stop-losses.
For the month of Dec '19, FIIs were net buyers of equity worth Rs 6.9 Billion. It was their third straight month of net buying. DIIs were net sellers of equity during Dec '19. Their total net selling was worth Rs 7.4 Billion, as per provisional figures.
The slowdown in the economy has helped narrow India's Current Account Deficit (CAD) to US $6.3 Billion during Q2 (Sep '19) against $19.0 Billion during Q2 (Sep '18) and $14.2 Billion during Q1 (Jun '19). The trade deficit contracted due to slowdown in imports and lower oil prices.
During Apr-Nov '19, India's fiscal deficit touched Rs 8.1 Trillion, which was 114.8% of the budget estimate of Rs 7.03 Trillion for FY 2019-20. Due to a shortfall in revenue collection, government has asked all departments to restrict expenses to 25% of the budget estimate during Jan-Mar '20.
The daily bar chart pattern of Nifty had touched a new high of 12294 on Dec 20, but has been consolidating sideways within a 175 points range since then. The index is trading above its three rising EMAs in a bull market.
Daily technical indicators are in bullish zones but not showing any upward momentum. MACD has crossed below its signal line. RSI is moving sideways above its 50% level. Slow stochastic has slipped down from its overbought zone.
Nifty's TTM P/E has moved down to 28.33, but remains well inside its overbought zone. The breadth indicator NSE TRIN (not shown) is rising inside its oversold zone, hinting at some more near-term index consolidation.
Q3 (Dec '19) company results will start getting announced from next week. The results are unlikely to show much improvement over Q2 (Sep '19) results. Small investors should look out for the few companies that may announce positive surprises.
Any breach of the 20 day EMA can drop Nifty to its rising 50 day EMA, where it should find some support.
