FIIs
were net sellers of equity on all five trading days. Their total net selling was worth Rs 69.2 Billion. DIIs
were net sellers of equity on Mon. and Fri. (May 18 and 22), but net buyers on the other three trading days. Their total net buying was
worth Rs 39.38 Billion, as per provisional figures.
RBI preponed the MPC meeting to reduce repo rate by 40 bps (to 4%) in a bid to inject more liquidity into the monetary system, after the market was disappointed by PM's Rs 20 Trillion 'stimulus' announcement. Rising food inflation and looming recession can lead to stagflation.
India's crude oil imports in Apr '20 fell 12.4% YoY to 17.28 million tonnes, thanks to low demand during the corona virus lockdown. Oil product imports dropped 6.5% to 3.35 million tonnes. However, refined products exports rose 37% YoY to 6.04 million tonnes.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex fell sharply on Mon. May 18 and slipped below the psychological 30000 level intra-day. It rallied for the next three days, but failed to overcome resistance from the sliding 20 day EMA. The index closed 425 points (1.4%) lower for the week.
Sensex had touched an intermediate top of 33887 on Apr 30, retracing
49.6% of its fall from the Jan 20 top (42274) to the Mar 24 low (25639). By stopping just short of the 50% Fibonacci retracement level, and forming an 'island reversal' pattern thereafter, the bear market rally got
terminated.
All three EMAs are falling, and the index is trading below them. The bear market has completed three months, and there are still no signs of bottom formation. Corporate performance during the first half of the financial year will not be good. The second half will depend on how well the corona virus gets contained.
Daily
technical indicators are giving mixed signals. MACD has slipped below its signal line in neutral zone. RSI has hovering below its
50% level. Slow stochastic has risen sharply from its oversold zone and crossed above its 50% level. Some near-term index upside is a possibility.
RIL's huge rights issue at a substantial premium is open for subscription till June 9th. Don't expect the index to fall much till then.
Many analysts are already calling a bottom at the Mar '20 low. Previous bear markets have never ended at the first low. Small investors should be prepared for a long haul. If you have spare cash, invest in small tranches.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty gave a thumbs down to FM's explanations about the so-called Rs 20 Trillion economic stimulus, and closed below its three weekly EMAs for the 11th straight
week. The index lost about 98 points (1.1%) on a weekly closing basis.
The
sharp bear market rally from the Mar '20 low of 7511 to the
Apr 30th intermediate top of 9889 retraced 48.3% of the fall from the
Jan '20 top. Nifty fell just short of the 50% Fibonacci retracement
level - terminating the rally. It has since closed lower for three consecutive weeks, but managed to stay above the psychological 9000 level.
The
20 week EMA crossed below the 200 week EMA some time back. 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 awaited but appears imminent.
Weekly technical indicators are in bearish zones. MACD is moving sideways below its falling signal line inside oversold zone. RSI is sliding down in bearish zone. Slow stochastic has dropped sharply below its 50% level. Some more index downside is likely.
Nifty's TTM P/E has remained flat at 20.97 but above its long-term average.
The breadth indicator NSE TRIN (not shown) is rising inside neutral zone, hinting at near-term index correction or consolidation.
Bottomline? Sensex and Nifty charts are trading well below their respective 200 day and 200 week EMAs in bear markets. Positive corona virus cases continue to increase rapidly after easing of lockdown restrictions. India's economy is slipping into a recession. Protect your cash. Invest only in small quantities.
FIIs
were net sellers of equity on the first three days of the week but net
buyers on the next two days. Their total net buying was worth a whopping Rs 185.9 Billion - due entirely to the GSK-HUL bulk deal on Thu. May 7. DIIs
were net buyers of equity on Wed. and Thu. (May 6 and 7), but net sellers on the other three trading days. Their total net buying was worth Rs 9.18 Billion, as per provisional figures.
Thanks to the countrywide virus lock-down, India's Manufacturing PMI fell to an all-time low of 27.4 in Apr '20 from 51.8 in Mar '20. (A number below 50 indicates contraction.) Services PMI plunged to an unprecedented low of 5.4 in Apr '20 from 49.3 in Mar '20. Composite (Manufacturing + Services) PMI plummeted to 7.2 in Apr '20 from 50.6 in Mar '20.
As per Moody's, India's GDP growth will be nil during FY 2020-21 because of the deep shock triggered by the coronavirus outbreak. Downside risks to growth will increase if the lockdown is extended beyond May 17th.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex had broken out above the 'rising wedge' pattern with an upward 'gap' on Apr 30, and closed above its falling 50 day EMA - appearing to negate the bearish pattern.
On May 4, the index opened trade with a downward 'gap' below its 50 day EMA, and broke out below the 'wedge' (as had been expected earlier). In the process, Nifty formed an 'island reversal' pattern that ended the pullback rally.
The index oscillated about its 20 day EMA during the rest of the week, giving bulls some hope. That does not mean dips will be opportunities to buy. A global economic recession is looming ahead, and India is not in a fiscal position to escape it.
Daily
technical indicators are looking neutral to bearish. MACD is moving along its '0' line in neutral zone. RSI is moving along its 50% level. Slow stochastic is trying to emerge from its oversold zone, and can trigger a technical bounce.
The stock market is expecting some good news in the form of a bailout package for small businesses. Even if it comes, it will likely be too little too late. A government more concerned with optics and stifling dissent appears to have lost its coronavirus fight long ago with its twisted priorities.
The prolonged lockdown may have delayed the spread of the virus, but without adequate testing/tracing facilities and a creaking healthcare infrastructure, the worst is ahead of - not behind - us. Not a conducive environment for a rising stock market. Small investors should conserve cash to fight another day.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty had broken out above the 'rising wedge' pattern in the previous week, but the breakout turned out to be a 'false' one. The index dropped to close below the 'wedge' - losing more than 600 points (6.2%) for the week.
The unexpected upward breakout had appeared to negate the bearish 'rising wedge'
pattern. The week's trade has restored the empirical order (of a downward breakout from a 'rising wedge' pattern).
The
20 week EMA has crossed below the 200 week EMA. All three weekly EMAs continue to fall, 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 giving bearish signals. MACD is below its signal line inside its oversold zone, and its upward momentum has stalled. RSI is falling inside bearish zone. Slow stochastic has dropped to the edge of its overbought zone.
Nifty's TTM P/E has moved down to 21.28 but remains above its long-term average.
The breadth indicator NSE TRIN (not shown) bounced up from the edge of its overbought zone, hinting at near-term index correction or consolidation.
Bottomline?
Sensex and Nifty charts continue to trade below their respective 200 day
and 200 week EMAs in bear markets. Extension of the corona virus lockdown is showing signs of pushing an already weak economy into a recession. Small investors can continue with their SIPs, but should avoid any bargain hunting.
In a holiday-shortened week, FIIs
were net sellers of equity on Mon. and Tue. (Apr 27 and 28) but net buyers on the next two days. Their total net buying was worth Rs 16.52 Billion. DIIs
were net buyers of equity on all four trading days, worth Rs 28.96 Billion, as per provisional figures.
Interestingly, during Apr '20, FIIs and DIIs were both net sellers of equity - worth Rs 52.1 Billion and Rs 1.2 Billion respectively. Wonder who bought during the sharp month-long counter-trend rally!
India's core sector output contracted 6.5% in Mar '20 - its worst performance in nearly 15 years - against growth of 7.2% in Feb '20. During FY 2019-20, infrastructure industries grew just 0.6% against 4.4% during FY 2018-19.
Top automobile makers like Maruti, M&M, Hyundai, Toyota, MG, Royal Enfield reported nil domestic sales during Apr '20, as their operations remained suspended due to the lockdown since Mar 25th to prevent the spread of the corona virus.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex broke out above the 'rising wedge' pattern with an upward 'gap' on Apr 30. The bearish pattern has been negated, thanks to combined FII and DII buying.
The index closed above its 50 day EMA after more than a month, and gained almost 2400 points (7.6%) on a weekly closing basis. Is it time for bulls to celebrate? Not quite. Note that the 200 day EMA is still falling, and the index is trading well below it. That is a sign of a bear market.
Bear market rallies tend to be fast and furious - and the rally during April has certainly been sharp. Many small investors with no experience of a bear market may have jumped in to 'buy the dip'. They will save themselves a lot of heartburn by maintaining tight stop-losses, or by booking profit.
Daily
technical indicators are giving mixed signals. MACD is rising above its
signal line and reached its neutral zone. RSI has crossed above its 50% level to enter bullish zone. Slow stochastic has re-entered its overbought zone, and can trigger a pullback inside the 'wedge'.
By extending the virus lockdown by a further two weeks through an utterly confusing order, the government has kicked the problem down the road with no clear plan of what to do next - leaving state governments and individuals to fend for themselves.
There is every possibility that FIIs will unleash a fresh bout of selling in May '20. They have been net sellers of equity for four straight months, though the volume of selling in Apr '20 was much lower than in Mar '20. Staying on the sidelines may be a good idea till the lockdown finally ends.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty broke out above the 'rising wedge' and gained more than 700 points (7.7%) on a weekly closing basis, but closed below its 200 week EMA for the 8th straight week.
The
20 week EMA has crossed below the 200 week EMA for the first time in 9
years. All three weekly EMAs continue to fall, 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 gained momentum as FIIs and DIIs were in buying mode
during the week. An unexpected upward breakout has negated the bearish 'rising wedge'
pattern.
Weekly technical indicators are giving bullish signals. MACD is below its signal line inside its oversold zone, but has formed a small bullish 'rounding bottom' pattern. RSI is rising in bearish zone. Slow stochastic has risen sharply to enter its overbought zone, and can trigger a pullback.
Nifty's TTM P/E has moved up to 22.35 - its highest level during Apr '20 - which is above its long-term average and in overbought zone.
The breadth indicator NSE TRIN (not shown) is in its
neutral zone, hinting at some near-term index consolidation or a
correction.
Bottomline?
Sensex and Nifty charts are trading below their respective 200 day
and 200 week EMAs in bear markets. Extension of the corona virus lockdown will most likely
push an already weak economy into a recession. Small investors can continue with their SIPs, but should sit on cash till a clear path to normalcy is visible.
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.
The Festival of Colours failed to enthuse FIIs, who were net sellers of equity on all four trading days of a holiday-shortened week. Their total net selling was worth a massive Rs 196.14 Billion. DIIs were net buyers of equity on all four days. Their total net buying was worth Rs 175.96 Billion, as per provisional figures.
India's Current Account Deficit (CAD) declined to 0.2% of GDP during Oct-Dec '19 from 0.9% during Jul-Sep '19 and 2.7% during Oct-Dec '18. The contraction in CAD was due to lower trade deficit and higher services receipts.
CPI-based inflation eased to 6.58% in Feb '20 from 7.59% in Jan '20. It was the first decline in 7 months, thanks to lower food prices.
BSE Sensex index chart pattern
The following comments from last week's post on the daily bar chart pattern of Sensex are worth noting:
"The impending 'death cross' of the 50 day EMA (blue) below the 200 day EMA will technically confirm a bear market."
"If Sensex breaches 36000, it can fall to its 200 week EMA (currently at 34800)."
The 36000 level, which had acted as a support during Aug-Sep '19, was easily breached on Mon. Mar 9. As often happens, the breached support level turned into a resistance level during a pullback on the next trading day (Mar 11).
Sensex formed a downward gap of 790 odd points on Thu. Mar 12, as bears pressed home their advantage. Panic selling on Fri. Mar 13 caused a circuit breaker and a 45 min. trading halt. On reopening of trade, huge short covering led to a sharp technical bounce that partly filled Thursday's 'gap'.
A partly or completely filled downward 'gap' is usually followed by a resumption of the down move. Note that the current level of the 200 week EMA (not shown) is 34450, which is just above Thursday's downward 'gap'. The zone between 34450-36000 should act as a strong resistance.
Friday's panic selling that dropped the index below 30000 - its lowest level in 3 years - may be a sign of capitulation by bulls that marks the end of a bull market. The 'death cross' of the 50 day EMA below the 200 day EMA - marked by grey oval - has technically confirmed a bear market. Thursday's closing level of 32778 was a 22.5% fall from Jan 20th top of 42274. A fall of 20% from the top is another technical sign of a bear market.
Can Friday's sharp fall below 30000, and the subsequent sharp recovery, be termed as a 'selling exhaustion'? The short answer is: No. A 'selling exhaustion' is a sign of capitulation by bears that typically happens after a prolonged downward move. Also, trading volumes should be significantly higher - which was not the case on Friday (Mar 13).
Daily technical indicators are in bearish zones and looking oversold. MACD is falling deeper inside its oversold zone. RSI is trying to emerge from its oversold zone. Slow stochastic has emerged from its oversold zone after re-entering it.
Since 'panic bottoms' seldom hold, expect Friday's intra-day low of 29389 will be tested and breached. Any continuation of Friday's short-covering pullback can be used to exit non-performing stocks in portfolios.
NSE Nifty index chart pattern
What a difference a week makes! The weekly bar chart pattern of Nifty formed a 76 points downward 'gap', crashed through its 200 week EMA and plummeted below 8600 - its lowest level in 3 years.
A circuit breaker and trading halt of 45 mins on Fri. Mar 13 led to a sharp short-covering pullback that stopped short of the support level of 10000. The support level should now become a resistance level. A bullish pattern of 'higher tops, higher bottoms' - formed during the past 18 months - has been negated.
The index fall below the 200 week EMA with a downward 'gap' is a sign that the long-term bull market has come to an end. The rapidly spreading corona virus has spooked global stock markets and FIIs, who have pulled out more than Rs 300 Billion during the past two weeks.
Weekly technical indicators are looking bearish and oversold. MACD is falling sharply in bearish zone. RSI and Slow stochastic have entered their respective oversold zones. Friday's short-covering bounce may last a bit longer before bears resume their selling.
Nifty's TTM P/E has moved down to 22.66, but still remains above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is falling inside its oversold zone. Some more near-term index pullback or some consolidation is possible.
Bottomline? Sensex and Nifty charts have closed well below their respective 200 week EMAs - signalling the end of long-term bull markets. A rapidly spreading corona virus has exacerbated uncertainty and concerns about weak economic growth and fiasco in the financial sector. Small investors should stay on the sidelines and use pullback rallies to move out of non-performing stocks.
