FIIs
were net sellers of equity on all five trading days. Their total net selling was worth Rs 40.09 Billion. DIIs
were net buyers of equity on Wed. and Thu. (Apr 22 and 23), but net
sellers on the other three days. Their total net selling was worth Rs 6.49 Billion, as per provisional figures.
Many agricultural workers are unaware that they can return to their fields during peak harvest season, even though the government has eased tough coronavirus lockdown for farmers.
As per a research report, trust about India's ability to overcome the coronavirus health crisis is high among consumers but belief about India's ability to recover from the economic crisis is considerably lower.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex moved above the 32000 level intra-day on Mon. Apr 20, and closed above its 20 day EMA for the 2nd
week in a row. However, FIIs and DIIs were both net sellers of equity. The index ended the week with a loss of about 260
points (0.8%).
The index has been consolidating with an upward bias within a bearish 'rising wedge'
pattern for the past 5 weeks. An expected downward breakout from the
pattern can lead to a test of the Mar 24th low of 25639.
Daily
technical indicators are giving mixed signals. MACD is rising above its
signal line towards its neutral zone. RSI is hovering at its neutral zone. Slow stochastic has fallen from its overbought zone, and gradually moving down.
Stock market analysts were hoping for a proper stimulus package to revive a faltering economy. All they got were a few dribs and drabs. There does not appear to be any co-ordinated plan for controlling the virus spread, rehabilitating migrant labour and fixing a destroyed supply chain. All will not be well if the lockdown is lifted on May 4.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty continued to consolidate within a bearish 'rising wedge' pattern, and closed below its 200 week EMA for the 7th straight week. The index slipped
about 112 points (1.2%) on a weekly closing basis.
The
20 week EMA has crossed below the 200 week EMA for the first time in 9
years. All three weekly EMAs are falling, which is a sign of a long-term
bear market. The 'death cross' of the 50 week EMA below the 200 week
EMA - which will technically confirm a long-term bear market - is still
awaited.
The
sharp counter-trend rally on Nifty chart from the Mar '20 low of 7511 is showing signs of petering out with FIIs and DIIs in selling mode during the week. An expected downward breakout from the 'rising wedge' pattern can drop the index to test its Mar '20 low.
Weekly technical indicators are giving mixed signals. MACD is below its signal line inside its oversold zone, but its downward momentum has stalled. RSI has emerged from its oversold zone, but is not showing any upward momentum. Slow stochastic has bounced up sharply towards its overbought zone. The pullback rally seems over.
Nifty's TTM P/E has moved down to 20.48, but remains above its long-term average. The breadth indicator NSE TRIN (not shown) has fallen inside its neutral zone, hinting at some near-term index consolidation or a correction.
Bottomline?
Sensex and Nifty charts are trading well below their respective 200 day
and 200 week EMAs within bearish 'rising wedge'
patterns. Extension of the corona virus lockdown till May 3 is likely to
push an already weak economy into a recession. Small investors can continue with their SIPs, but should stay away from bargain-hunting.
In another holiday-shortened week, FIIs were net buyers of equity on Wed. (Apr 15), but net sellers on the other three trading days. Their total net selling was worth Rs 41.97 Billion. DIIs were net buyers of equity on Thu. and Fri. (Apr 16 and 17), but net sellers on Mon. and Wed. (Apr 13 and 15). Their net selling was worth Rs 3.39 Billion, as per provisional figures.
India's CPI-based inflation eased to 5.91% during Mar '20 from 6.58% during Feb '20 due to a sharp fall in food inflation. CPI was 2.86% in Mar '19.
Merchandise exports in Mar '20 was worth US $21.41 Billion, down 34.57% from $32.72 Billion in Mar '19. Imports contracted 28.72% to $31.16 Billion. The trade deficit narrowed to $9.75 Billion - the lowest in 13 months.
RBI reduced the reverse repo rate by 25 basis points (0.25%) and the Liquidity Coverage Ratio (LCR) for banks to 80% from 100% in a bid to inject more liquidity into the banking system. Without a proper fiscal stimulus from the government, such monetary inducements may fall well short of expectations.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex oscillated about its 20 day EMA during a holiday-shortened trading week, and closed above its 20 day EMA with a weekly gain of about 430 points (1.4%).
During the first 9 trading days of Apr '20 (till Apr 18th), Sensex has gained more than 2100 points (7.2%). What is interesting is that FIIs and DIIs were both net sellers of equity - cumulatively during the week, and also during the 9 trading days in Apr '20.
The index continued its consolidation with an upward bias within a bearish 'rising wedge' pattern. Some more upside - may be past the 32000 level - is still possible. But remember that the expected breakout from a 'rising wedge' pattern is downwards.
Daily technical indicators are giving mixed signals. MACD is rising above its signal line in bearish zone. RSI is facing resistance from its 50% level. Slow stochastic has fallen down from its overbought zone, and can trigger a correction.
Partial opening of manufacturing and services activities from Mon. Apr 20 in an effort to keep a faltering economy from slipping into a recession may be good in theory but will be difficult to implement. It can lead to a community spread of the COVID19 virus, with disastrous consequences for an inadequate healthcare infrastructure.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty closed higher for the second week in a row. On a weekly closing basis, the index gained about 155 points (1.7%) in four days of trading in a holiday-shortened week. However, it closed well below its 200 week EMA for the 6th straight week.
The 20 week EMA has crossed below the 200 week EMA for the first time in 9 years. All three weekly EMAs are falling, which is a sign of a long-term bear market. The 'death cross' of the 50 week EMA below the 200 week EMA - which will technically confirm a long-term bear market - is still awaited.
The sharp counter-trend rally on Nifty chart appears to have formed a bearish 'rising wedge' pattern, from which the expected breakout is downwards. Upside risk is increasing by the day.
Weekly technical indicators are correcting oversold conditions. MACD is still falling inside its oversold zone, but its downward momentum is stalling. RSI has emerged from its oversold zone, but not showing much upward momentum. Slow stochastic has bounced up sharply to reach neutral zone. The pullback rally may come to an end soon.
Nifty's TTM P/E has moved up to 20.85, which is above its long-term average. The breadth indicator NSE TRIN (not shown) has fallen to the edge of its oversold zone. Near-term index upside seems limited.
Bottomline? Sensex and Nifty charts have closed well below their respective 200 day and 200 week EMAs, and are trading within bearish 'rising wedge' patterns. Extension of the corona virus lockdown till May 3 is likely to push an already weak economy into a recession. Small investors should continue with their SIPs, but avoid chasing the counter-trend rallies.
In a holiday-shortened week, FIIs were net buyers of equity on all three trading days - worth Rs 44.2 Billion. (The last time they were net buyers three days in a row was back in the 3rd week of Dec '19.) DIIs were net buyers of equity on Tue. Apr 7, but net sellers on Wed. and Thu. (Apr 8 and 9). Their net selling was worth Rs 18.0 Billion, as per provisional figures.
India's Manufacturing Purchase Manager's Index (PMI) declined to a 4 month low of 51.8 in Mar '20 from 54.5 in Feb '20. Services PMI contracted to 49.3 in Mar '20 from 57.5 in Feb '20. The Composite (Manufacturing + Services) PMI fell to 50.6 in Mar '20 from 57.6 in Feb '20. (A figure above 50 indicates expansion.)
India's Index of Industrial Production (IIP) rose to a 7 month high of 4.5% in Feb '20 against 0.2% in Feb '19 due to pickup in mining and electricity output. During Apr '19-Feb '20, cumulative IIP was only 0.9% against 4% in the Apr '18-Feb '19 period.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex rallied sharply on the back of FII buying, and closed above its falling 20 day EMA for the first time in more than a month. In just three days of trading, the index gained more than 3500 points (12.9%) on a weekly closing basis.
Bulls would do well not to get carried away. During the past three weeks, Sensex has been consolidating sideways with an upward bias, and appears to have formed a bearish 'rising wedge' pattern.
Such a pattern often forms in the middle of a down move. If the pattern plays out, the expected downward breakout can drop the index to much lower levels. Before it can do so, some more upside - towards 32000-33000 - can't be ruled out.
Daily technical indicators are looking bullish after correcting oversold conditions. MACD is rising above its signal line and has emerged from it oversold zone. RSI is rising towards its 50% level. Slow stochastic has risen sharply to enter its overbought zone, and can trigger some correction or consolidation.
Sensex is trading well below its falling 200 day EMA in a bear market. Rallies in a bear market are usually sharp and swift. Those who are betting on an index revival in the near-term can get caught in a bull trap.
Extension of the lock-down period by two more weeks is an indication that the corona virus is far from being controlled. Economic growth is going to take a huge hit and may take a year or two to recover. Tough days ahead.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty closed higher after 7 weeks of lower closes. On a weekly closing basis, the index gained more than 1000 points (12.7%) in just three days of trading in a holiday-shortened week. However, it closed well below its 200 week EMA for the fifth straight week.
The 20 week EMA is about to cross below the 200 week EMA for the first time in 9 years. All three weekly EMAs are falling, which is a sign of a long-term bear market. The 'death cross' of the 50 week EMA below the 200 week EMA - which will technically confirm a long-term bear market - is still awaited.
Weekly technical indicators are beginning to correct oversold conditions. MACD is falling deeper inside its oversold zone, but its downward momentum is decelerating. RSI has just about managed to emerge from its oversold zone. Slow stochastic has again bounced up from the edge of its oversold zone. Any further rally may bring bears to the fore.
Nifty's TTM P/E has moved up to 20.53, which is above its long-term average. The breadth indicator NSE TRIN (not shown) has fallen a bit inside its oversold zone. Some near-term index consolidation is likely.
Bottomline? Sensex and Nifty charts have closed well below their respective 200 week EMAs for the fifth straight week, and are trading in long-term bear markets. Extension of the corona virus lockdown by two more weeks can push an economy already devastated by twin shocks of demonetisation and unplanned GST implementation into a recession. Small investors can continue with their SIPs, but should avoid any lump sum buying.
During Mar '20, FIIs were net sellers of equity worth a humongous Rs 658.17 Billion. It was their highest monthly net selling ever - exceeding their previous highest monthly net selling (Jan '08) by more than 2.2 times. DIIs were net buyers of equity worth an enormous Rs 555.95 Billion. It was their highest monthly net buying ever - exceeding their previous highest monthly net buying (Oct '18) by more than 2.1 times, as per provisional figures.
Automobile sales during Mar '20 fell off a cliff. The de-growth was the worst ever. Combined passenger vehicle sales fell 51% compared with Mar '19 - with all major manufacturers declaring high double digit falls. Combined commercial vehicle sales crashed 89% YoY. (Growth in CV sales is one of the first signs of economic recovery. India seems very far away from that.)
Despite the revised estimate made in the budget, direct tax collections during FY 2019-20 fell short by Rs 1.42 Trillion from the revised estimate of Rs 11.7 Trillion, and was also lower than FY 2018-19 collection of Rs 11.17 Trillion.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex had formed a 'reversal day' bar (higher high, lower close) on Fri. Mar 27. That marked an intermediate top at 31126. Bears ruled on a holiday-shortened trading week. The index lost more than 2200 points (~7.5%) on a weekly closing basis. All three EMAs are falling, and the index is trading below them in a bear market.
Sensex is correcting the 11 year gain of some 34000 odd points from the Mar '09 low to the Jan '20 top. A 50% Fibonacci retracement is expected to drop the index to about 25100. (The index has already touched a low of 25639.)
What if 25100 gets breached? Sensex can fall to 21300 (61.8% Fibonacci retracement level). Will it? A lot will depend on what happens after the lockdown period in India ends on Apr. 14, and how soon the corona virus gets contained in USA and Europe.
Daily technical indicators are in bearish zones after correcting oversold conditions. MACD crossed above its signal line inside oversold zone, but its upward momentum has stalled. RSI is falling towards its oversold zone, after emerging from it. Slow stochastic has fallen sharply towards its oversold zone, hinting at some more near-term index correction.
Those with no prior experience of bear markets should not be in a hurry to enter the market, despite exhortations by experts and fund managers. In a bear market, smart investors make money by selling short - an activity best avoided by small investors. This bear market is not going to end in a hurry. Wait patiently for lower prices.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty touched a higher intra-week low after 6 weeks, but bulls need not feel too enthused about that. On a closing basis, the index touched a new 3 year low of 8084, and closed well below its 200 week EMA for the fourth straight week.
The 20 week EMA looks poised to cross below the 200 week EMA for the first time in 9 years. All three weekly EMAs are falling, which is a sign of a long-term bear market. However, the 'death cross' of the 50 week EMA below the 200 week EMA - which will technically confirm a long-term bear market - is awaited.
Weekly technical indicators are looking bearish and oversold. MACD is falling deeper inside its oversold zone. RSI is also falling further inside its oversold zone. Slow stochastic is about to enter its oversold zone. Any technical bounce may induce more bear selling.
Nifty's TTM P/E has moved down to 18.22, which remains above its long-term average. The breadth indicator NSE TRIN (not shown) has risen sharply into its oversold zone, hinting at some near-term index consolidation.
Bottomline? Sensex and Nifty charts have closed well below their respective 200 week EMAs for the fourth straight week. Both indices are in long-term bear markets. RBI's desperate interest rate cuts came too late to boost an economy that has been progressively devastated by shocks of demonetisation, unplanned GST implementation and now a virus lock-down. Small investors can continue with their SIPs, but should wait for the bear phase to play out.
