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.
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.
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