FIIs were net sellers of equity on all five trading days of the week. Their total net selling was worth a huge Rs 113.69 Billion. DIIs were net buyers of equity on all five days. Their total net buying was worth a massive Rs 159.86 Billion, as per provisional figures - thanks to a big bulk deal on Adani Gas on Fri. Feb 28.
India's fiscal deficit for the Apr '19 to Jan '20 period touched Rs 9.86 Trillion, which was 128.5% of the revised deficit target of Rs 7.67 Trillion for FY 2019-20. Expenditure stood at Rs 22.68 Trillion (84.1%) while revenue receipts were Rs 12.82 Trillion.
India's GDP growth during Q3 (Oct-Dec '19) slipped to a nearly 7 year low of 4.7% on a YoY basis due to contraction in manufacturing output. However, on a QoQ basis, there was a slight improvement from Q2 (Jul-Sep '19) figure of 4.5%.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex clearly shows bear domination during the week. After breaking down below a 'diamond' pattern on Mon. Feb 24 (the possibility was mentioned in last week's post), downward momentum of the index intensified.
The 200 day EMA - that technically separates bull and bear markets - was easily breached. More worrisome for bulls is the 336 points downward 'gap' formed on Fri. Feb 28 (marked by light grey area on chart). Such a 'gap' occurring in the midst of a down move can be a 'measuring gap' - with a downward target of about 37100.
Any index pullback towards the 200 day EMA may partially or completely fill the downward 'gap'. The corrective down move can be expected to resume thereafter. (Remember that a 'gap' can sometimes remain unfilled for long periods.)
Daily technical indicators are in bearish zones and looking oversold. MACD is falling towards its oversold zone. RSI and Slow stochastic are inside their respective oversold zones. A technical bounce towards 39000 is a possibility.
Global stock markets are in risk-off mode due to concerns about effect of the rapidly spreading corona virus on economic growth. The virus appears to have been contained in China - though their data should be taken with a pinch of salt - but it is spreading in several other countries.
Small investors should not feel adventurous. Avoid averaging down or bottom fishing. Every index fall need not be a buying opportunity. Concentrating on capital protection at such times will let one live to fight another day.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty plummeted below a 'diamond' reversal pattern, and closed well below its 20 week and 50 week EMAs with a weekly loss of 7.3%. However, a bullish pattern of 'higher tops, higher bottoms' - formed during the past 18 months - is still intact.
The index continues to trade above its rising 200 week EMA in a long-term bull market. The rapidly spreading corona virus may take the wind out of bullish sails, as FIIs are falling over each other as they head for the exit doors.
Weekly technical indicators are looking bearish and showing downward momentum. MACD is falling sharply below its signal line in bullish zone. RSI and Slow stochastic have dropped below their respective 50% levels. The correction is not over yet.
Nifty's TTM P/E has moved down to 25.49, its lowest level for the month of Feb '20 but above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has dropped down from its oversold zone, hinting at a possible near-term index pullback.
Bottomline? After touching lifetime highs on Jan 20th, Sensex and Nifty charts have wiped out all gains made in the previous 4 months since Sep 20th (the day corporate tax cuts were announced). Widening fiscal deficit and weak GDP number have added fuel to the fire of bearishness in global stock markets. Investors should remain extremely cautious and protect their capital. Think about buying after the correction plays out.
India's fiscal deficit for the Apr '19 to Jan '20 period touched Rs 9.86 Trillion, which was 128.5% of the revised deficit target of Rs 7.67 Trillion for FY 2019-20. Expenditure stood at Rs 22.68 Trillion (84.1%) while revenue receipts were Rs 12.82 Trillion.
India's GDP growth during Q3 (Oct-Dec '19) slipped to a nearly 7 year low of 4.7% on a YoY basis due to contraction in manufacturing output. However, on a QoQ basis, there was a slight improvement from Q2 (Jul-Sep '19) figure of 4.5%.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex clearly shows bear domination during the week. After breaking down below a 'diamond' pattern on Mon. Feb 24 (the possibility was mentioned in last week's post), downward momentum of the index intensified.
The 200 day EMA - that technically separates bull and bear markets - was easily breached. More worrisome for bulls is the 336 points downward 'gap' formed on Fri. Feb 28 (marked by light grey area on chart). Such a 'gap' occurring in the midst of a down move can be a 'measuring gap' - with a downward target of about 37100.
Any index pullback towards the 200 day EMA may partially or completely fill the downward 'gap'. The corrective down move can be expected to resume thereafter. (Remember that a 'gap' can sometimes remain unfilled for long periods.)
Daily technical indicators are in bearish zones and looking oversold. MACD is falling towards its oversold zone. RSI and Slow stochastic are inside their respective oversold zones. A technical bounce towards 39000 is a possibility.
Global stock markets are in risk-off mode due to concerns about effect of the rapidly spreading corona virus on economic growth. The virus appears to have been contained in China - though their data should be taken with a pinch of salt - but it is spreading in several other countries.
Small investors should not feel adventurous. Avoid averaging down or bottom fishing. Every index fall need not be a buying opportunity. Concentrating on capital protection at such times will let one live to fight another day.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty plummeted below a 'diamond' reversal pattern, and closed well below its 20 week and 50 week EMAs with a weekly loss of 7.3%. However, a bullish pattern of 'higher tops, higher bottoms' - formed during the past 18 months - is still intact.
The index continues to trade above its rising 200 week EMA in a long-term bull market. The rapidly spreading corona virus may take the wind out of bullish sails, as FIIs are falling over each other as they head for the exit doors.
Weekly technical indicators are looking bearish and showing downward momentum. MACD is falling sharply below its signal line in bullish zone. RSI and Slow stochastic have dropped below their respective 50% levels. The correction is not over yet.
Nifty's TTM P/E has moved down to 25.49, its lowest level for the month of Feb '20 but above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has dropped down from its oversold zone, hinting at a possible near-term index pullback.
Bottomline? After touching lifetime highs on Jan 20th, Sensex and Nifty charts have wiped out all gains made in the previous 4 months since Sep 20th (the day corporate tax cuts were announced). Widening fiscal deficit and weak GDP number have added fuel to the fire of bearishness in global stock markets. Investors should remain extremely cautious and protect their capital. Think about buying after the correction plays out.
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