Sensex, Nifty charts (Dec 18, 2020): rising higher but showing some signs of fatigue

FIIs continued with their strong buying during the week. They were net buyers of equity worth Rs 118.06 Billion. DIIs tried their best to match them. They were net sellers of equity worth Rs 110.25 Billion. Sensex and Nifty both gained around 1.8% on a weekly closing basis.

India's CPI-based retail inflation eased marginally to 6.93% in Nov '20 from a six and a half year high of 7.61% in Oct '20 - thanks to easing of vegetable prices. WPI-based wholesale inflation rose for the fourth consecutive month to a nine months' high of 1.55%. 

In Nov '20, India's exports declined 8.74% to US $23.52 Billion while imports declined 13.32% to $33.39 Billion. The trade deficit hit a 10 months' high of $9.87 Billion. During Apr-Nov '20, exports dropped 17.76% to $173.66 Billion while imports dropped 33.55% to $215.69 Billion - leaving a trade deficit of $42 Billion.

BSE Sensex index chart pattern

The daily bar chart pattern of Sensex again touched new intra-day (47026) and closing (46961) highs during the week. FIIs continued with their strong buying while ignoring stretched index valuation. A falling US Dollar index may have motivated them to do so.

Sensex is trading well above its three rising EMAs in a long-term bull market. It has been rising within a nine months long upward-sloping channel, and is testing resistance from the upper edge of the trading channel. There is a possibility of some correction or consolidation prior to the Christmas holidays.

Daily technical indicators are in bullish zones, and looking overbought. MACD is moving sideways after merging with its signal line. ROC is moving sideways along with its 10 day MA. RSI is rising higher inside its overbought zone. Slow stochastic is rising gradually inside its overbought zone.

The farmers' agitation is being allowed to fester by an adamant government. Instead of solving the problem, farmers are being vilified and forced to hunker down in the open in extremely cold weather. The negative effects are beginning to be felt in industry, food prices and movement of goods.

Macroeconomic fundamentals have taken a back seat as the index is rising on the back of a flood of FII money. Enjoy the bull ride while it lasts, but maintain trailing stop-losses to protect profits.  

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty rose for the seventh straight week to close at a new high of 13760. A falling US Dollar index has resulted in strong buying by FIIs - pushing the index higher into extremely stretched valuation zone. 

The index has been rising within an upward-sloping channel for almost 9 months, and is trading well above its three rising weekly EMAs in a long-term bull market. FII buying has sustained the long rally, but there is possibility of some profit booking before Christmas holidays.

Weekly technical indicators are inside their respective overbought zones. MACD is rising above its signal line. ROC has dipped towards its rising 10 week MA. RSI and Slow stochastic are rising slowly. 

Nifty's TTM P/E has touched a new high of 37.84 - which is far above its long-term average and well inside its overbought zone. The breadth indicator NSE TRIN (not shown) has climbed sharply from its overbought zone, and can trigger some near-term index consolidation or correction.

 

Bottomline? Sensex and Nifty charts are rising to newer highs on the back of strong buying by FIIs. Year-end profit booking by foreign fund houses is a distinct possibility. This is not a good time to look for new stock ideas. Hold existing positions with trailing stop-losses.

Sensex, Nifty charts (Nov 06, 2020): soaring on the back of FII buying

FIIs were net buyers of equity worth a huge Rs 134 Billion - almost equalling their entire net buying during Oct '20. DIIs were net sellers of equity worth Rs 67.9 Billion. Both indices gained nearly 5.5% for the week.

Nikkei/IHS Markit India Manufacturing PMI for Oct '20 rose to 58.9 - its highest level since mid-2008 - from 56.8 in Sep '20. The Services PMI climbed to 54.1 in Oct '20 from 49.8 in Sep '20 - its highest level since Feb '20 and well above the 50 mark that separates growth from contraction.

The Composite PMI (Mfg. + Serv.) rose to 58 in Oct '20 - its highest level since Jan '12 - from 54.6 in Sep '20.

India's merchandise exports declined 5.4% to US $24.82 Billion in Oct '20. Imports fell 11.56% to $33.6 Billion, narrowing the trade deficit to $8.78 Billion against $11.76 Billion in Oct '19. 

BSE Sensex index chart pattern

The daily bar chart pattern of Sensex bounced up sharply after receiving good support from its 50 day EMA in the previous week. The index opened with an upward 'gap' on Thu. Nov 5, thanks to a flood of FII money. The next day, it rose higher to close within 60 points of its lifetime closing high of 41945 (touched back in Jan 17 '20).

The index is trading above its three rising daily EMAs in a long-term bull market. However, proximity to a previous high, and combined negative divergences visible on all four daily technical indicators (which failed to touch new highs with the index) calls for caution.

Daily technical indicators are looking bullish. MACD has crossed above its signal line in neutral zone. ROC has moved above its 10 day MA in neutral zone. RSI is climbing above its 50% level. Slow stochastic has bounced up sharply to re-enter its overbought zone. Some more near-term index upside is possible, but avoid entering the market now.

Aggregate Q2 (Jul-Sep '20) results of 1000 companies show top line pressure but bottom line improvements (thanks to tax cuts). Pharma companies declared good numbers. ITC results were a disappointment, because the pandemic has affected its cigarettes, hospitality and stationery products businesses. 

Small investors would do well not to get caught up in bullish euphoria. Good stocks are becoming more expensive. Tendency to look for hidden gems among junk stocks can be injurious to wealth. Sometimes, doing nothing is a good strategy.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty rose sharply to close within 100 points of its lifetime closing high of 12352 - touched in the week ending on Jan 17, '20. Strong FII buying negated technical headwinds. The index closed above its three rising weekly EMAs in a long-term bull market for the 18th straight week. 

Bulls are in total control of the chart. A new lifetime high seems just a hop, skip and jump away. However, caution is advised near a lifetime high. Everyone remembers the sharp correction after the index touched its previous top in Jan '20.

What is the reason for the sudden rush of FII buying? Wasn't a win for Biden in the US elections considered bearish for the stock market? According to experts, since Democrats failed to get a majority in the US Senate, Biden will be unable to push through any new taxes. Sometimes, stock markets use any excuse to go up (or down)!

Weekly technical indicators are in bullish zones, and looking overbought. MACD is rising above its signal line in overbought zone. RSI is moving sideways above its 50% level. Slow stochastic has bounced up from the edge of its overbought zone. RSI and Slow stochastic are showing negative divergences by failing to touch new highs with the index, and may trigger some consolidation or correction.

Nifty's TTM P/E has moved up to 33.09 - which is well above its long-term average and well inside its overbought zone. The breadth indicator NSE TRIN (not shown) is still in neutral zone - hinting at near-term index consolidation.
 
Bottomline? Sensex and Nifty charts have soared to their highest levels since touching their lifetime highs back in Jan '20. Negative divergences in technical indicators, and proximity to lifetime highs may lead to profit booking. Stay invested, but avoid fresh commitments.

Sensex, Nifty charts (Oct 16, 2020): pause after sharp two weeks long rallies

FIIs were net sellers of equity on Thu. and Fri. (Oct 15 and 16) but were net buyers during the first three trading days of the week. Their total net buying was worth Rs 11.86 Billion. DIIs were net sellers of equity during the entire week. Their total net selling was worth Rs 52.17 Billion.

India's Index of Industrial Production (IIP) contracted for the 6th straight month in Aug '20 to -8% against a downward revised -10.8% in Jul '20 and -15.8% in Jun '20. The contraction may continue in Sep '20.

After contracting for 6 months in a row, India's merchandise exports in Sep '20 rose by 5.27% YoY to US $27.4 Billion, while imports slipped 19.6% to $30.31 Billion. The trade deficit narrowed to $2.91 Billion against $11.67 Billion in Sep '19.

BSE Sensex index chart pattern

After a sharp rally from its 200 day EMA, the daily bar chart pattern of Sensex consolidated sideways just below the 41000 level during the first three trading days.

On Thu. Oct 15, the index breached the 41000 level intra-day, but fell sharply as both FIIs and DIIs resorted to booking profit. The index dropped below 40000 towards its 20 day EMA - forming a large 'reversal day' bar (higher high, lower close) that often marks an intermediate top.

Bears need not get too elated. All three daily EMAs are rising and the index is trading above them in a bull market. However, Friday's pullback ended with a close just below 40000, leaving the door open for some more correction.

Daily technical indicators are in bullish zones, but showing downward momentum. MACD is sliding down towards its rising signal line. ROC has crossed below its 10 day MA. RSI is turning down inside its overbought zone. Slow stochastic has dropped to the edge of its overbought zone.

Vedanta delisting failed. Couple of new share listings failed to generate much excitement. Bullish sentiment may be waning even as new investors are continuing to open demat accounts in large numbers (as per Zerodha).

Q2 (Jul-Sep '20) corporate results and festival season sales of  consumer discretionary and durables will now be in focus. Be very selective in choosing your investment vehicles. The easy money has already been made. Remember the 'Greater Fool Theory' - particularly near market tops.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty breached the psychological level of 12000 intra-week for the first time in 8 months but failed to test its lifetime high of 12430 (touched back in Jan '20). The index dropped below 11700 before closing above 11750, losing about 150 points (1.3%) on a weekly closing basis.

Bulls have nothing to worry about for now, as all three weekly EMAs are rising and Nifty is trading above them in a long-term bull market. However, caution is advised as the index formed a weekly 'reversal' bar (higher high, lower close) that sometimes mark an intermediate top.

Weekly technical indicators are in bullish zones. MACD is rising above its signal line in overbought zone. RSI is moving sideways above its 50% level. Slow stochastic has re-entered its overbought zone. Some index consolidation or correction is likely. 

Nifty's TTM P/E touched a new high 34.87 on Wed. Oct 14, before slipping down to 34.13 - which is well above its long-term average and deep inside its overbought zone. The breadth indicator NSE TRIN (not shown) is sliding down below the edge of its oversold zone - hinting at some near-term index upside.
 
Bottomline? Sensex and Nifty charts have reached close to their lifetime highs touched back in Jan '20. Mid-cap and small-cap stocks have started correcting. A handful of large-cap stocks fuelled the last leg of the rally. Exuberance should be curbed. Time for circumspection.

Sensex, Nifty charts (Oct 01, 2020): in 5 weeks long down trends after 5 months long rallies

After 4 straight months of net buying, FIIs were net sellers of equity during Sept '20. Their total net selling was worth Rs 114.11 Billion. DIIs were net buyers of equity during Sept '20. Their total net buying was worth Rs 1.1 Billion.

During Apr-Aug '20, India's fiscal deficit was Rs 8.7 Trillion, which was 109.3% of the annual budget estimate of Rs 7.96 Trillion. The fiscal deficit was 78.7% of the annual budget estimate during Apr-Aug '19.

The IHS Markit India Manufacturing PMI increased to 56.8 in Sept '20 from 52 in Aug '20. It was the second straight month of expansion (a reading above 50) after 4 months of contraction.

India's merchandise exports rose 5.3% YoY to US $27.4 Billion in Sep '20 while imports declined 19.6%, leaving a trade deficit of $2.91 Billion against $11.67 Billion in Sep '19. During Apr-Sep '20, exports were down 21.43% to $125.1 Billion while imports were down 40.1% to $148.7 Billion on a YoY basis.

BSE Sensex index chart pattern

In a holiday-shortened trading week, bulls took the initiative on the daily bar chart pattern of Sensex. After facing resistance from its 20 day EMA during the first three trading days, the index formed a 174 points upward 'gap' and closed above its three EMAs in bull territory.

Bears may not give up their fight easily. Note that the index not only remained below the 335 points downward 'gap' formed back on Feb 28th, it also traded below the (blue) down trend line (drawn through its Aug 31 and Sep 16 tops).

Daily technical indicators are looking neutral to mildly bullish. MACD is trying to cross above its signal line in neutral zone. ROC has moved above its 10 day MA in neutral zone. RSI is at its 50% level. Slow stochastic has crossed above its 50% level.

Several IPOs and FPOs have been hitting the market in quick succession. Most have been oversubscribed by large percentages and have subsequently listed on the stock exchanges at huge premiums to their issue prices. 

These are signs of a market top, as large amounts of money are getting sucked out of the secondary market. Expect more index consolidation till Q2 (Jul-Sep '20) corporate results are announced from mid-Oct '20. 

With the festival season approaching fast, there is anecdotal evidence that malls are getting crowds and people are overcoming their virus fears to visit restaurants and bars. That is worrying because similar opening up in western countries led to a second wave of virus infections. Stay safe, wear masks and use hand sanitisers.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty closed above the 'support-resistance zone' between 11000-11250 - gaining more than 360 points (3.3%) on a weekly closing basis, but remained below the (purple) down trend line for the 5th straight week.

The index has formed a bearish pattern of 'lower tops, lower bottoms' during the past 5 weeks after a sharp rally from the Mar '20 low. But bears are not yet in control. All three weekly EMAs are rising, and Nifty is trading above them in a long-term bull market.

Weekly technical indicators are in bullish zones but not showing much upward momentum. MACD is moving sideways above its signal line in overbought zone. RSI is sliding down towards its 50% level. Slow stochastic has dropped down from its overbought zone. Some more correction/consolidation is likely. 

Nifty's TTM P/E has moved up to 33.18, its highest level since Sep 16th and well above its long-term average deep inside its overbought zone. The breadth indicator NSE TRIN (not shown) is moving down inside its oversold zone - hinting at near-term index consolidation or correction.
 
Bottomline? Sensex and Nifty charts are in 5 weeks long down trends after sharp rallies from their Mar '20 lows. Expect more consolidation or correction during the next couple of weeks. Wait for Q2 (Jul-Sep '20) corporate results before committing fresh money to individual stocks.

Sensex, Nifty charts (Sep 18, 2020): consolidation continues after sharp rallies

FIIs were net sellers of equity on Thu. Sep 17, but were net buyers during the other days of the week. Their total net buying was worth Rs 16.89 Billion. DIIs were net sellers during all five days. Their total net selling was worth Rs 23.97 Billion.

Total vehicle registrations at Regional Transport Offices during Aug '20 fell 26.81% YoY. While tractor registrations grew 27.8%, PV, 2W, CV and 3W registrations fell 7.1%, 28.7%, 57.4% and 69.5% respectively.

CPI based retail inflation slipped a bit to 6.69% YoY in Aug '20 from 6.73% in Jul '20. It was at 3.28% in Aug '19. WPI based wholesale inflation turned positive in Aug '20 for the first time since Mar '20, rising to 0.16% YoY in Aug '20 from -0.58% in Jul '20.

Exports fell 12.7% YoY in Aug '20 while imports were down 26%, resulting in a lower trade deficit of US $6.77 Billion against $13.86 Billion a year ago.

BSE Sensex index chart pattern

During the week, the daily bar chart pattern of Sensex consolidated sideways while trading above its three daily EMAs in a bull market. However, bears put up a good fight at the 335 points downward 'gap' (formed on Feb 28) - continuing to frustrate efforts by bulls to push the index higher for the third straight week.

A foray inside the 'gap' zone on Wed. Sep 16 could not be sustained despite buying by FIIs. On a weekly basis, the index closed flat. The hurdle of the 'gap' will need to be overcome before bulls can resume control of the chart. 

Daily technical indicators are looking neutral to bullish. MACD is moving sideways after merging with its signal line in bullish zone. ROC has moved above its 10 day MA in neutral zone. RSI has just crossed above its 50% level. Slow stochastic is rising above its 50% level.

US stock indices closed lower for the third straight week, as a tech-led sell-off intensified. If current restrictions on short selling are not extended beyond Sep 24, expect selling to intensify in Indian stock indices as well.

After 50% gains from its Mar '20 low, do not expect Sensex to surge much higher. Stocks like RIL, which has gained more than 100% since its Mar '20 low, HDFC twins, HUL fuelled the index rally. 

Now midcap and smallcap stocks are coming to the forefront and several IPOs are in the pipeline. Small investors should be extra cautious not to fall into the trap of making easy money with little effort. 

Wealth building in the stock market requires knowledge, discipline, patience and a lot of time for the magic of compounding to take effect. Quick profits are here today, gone tomorrow.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty had bounced up after dropping inside the 'support-resistance zone' between 11000-11250 in the previous week. Despite FII buying, the index failed to make much upward progress - gaining about 40 points (0.35%) on a weekly closing basis.

Convincing breach of an up trend line is often a sign of trend reversal. But bears are still on the back foot, since all three weekly EMAs are moving up and the index is trading above them in long-term bull territory. 

Weekly technical indicators are in bullish zones but not showing any upward momentum. MACD is above its signal line inside its overbought zone. RSI is moving sideways above its 50% level. Slow stochastic is sliding down towards the edge of its overbought zone. 

After touching a new high of 33.03 on Tue. Sep 15, Nifty's TTM P/E has moved down a bit to 32.98, which is well above its long-term average and deep inside its overbought zone. The breadth indicator NSE TRIN (not shown) has dropped sharply from its oversold zone. Some more near-term index consolidation or correction is possible.
 
Bottomline? After breaching 5 months long up trend lines on Sensex and Nifty charts, both indices have been consolidating near resistance zones. Some more consolidation or correction is likely. Stay on the sidelines. Wait for better entry opportunities.

Sensex, Nifty charts (Aug 14, 2020): bears keep bulls on a leash

FIIs were net buyers of equity on all five trading days. Their total net buying was worth Rs 21.30 Billion. DIIs were net sellers of equity on all five trading days. Their total net selling was worth Rs 44.21 Billion.

India's CPI-based retail inflation rose to 6.93% in Jul '20 from 6.23% in Jun '20. CPI remained above 6% for the fourth straight month. Food inflation was 9.62%, thanks to supply disruptions. WPI-based wholesale inflation was -0.58% in Jul '20 against -1.81% in Jun '20.

After a US $790 Million trade surplus in Jun '20, India's trade deficit was US $4.83 Billion in Jul '20. Exports were down 10.21% to $23.64 Billion, while imports were down 28.4% to $28.47 Billion. Trade deficit was $13.43 Billion in Jul '19.

BSE Sensex index chart pattern

Note the following comment from last week's post on the daily bar chart pattern of Sensex: "Sensex needs to convincingly move above its Jul. 29th top of 38617 for the bullish pattern of 'higher tops, higher bottoms' to continue."

Despite FII buying throughout the week, the index tested but failed to move above 38617. On Fri. Aug 14, the index formed a 'reversal day' bar (higher high, lower close) and dropped to close near the lower edge of the 640 points downward 'gap' formed back on Mar 6th.

Should bulls be worried? Not yet. Though the index slipped below its 20 day EMA intra-day on Fri., it received support from the (blue) up trend line and bounced up. Remember that a trend line gets stronger with each successful test (unlike support/resistance levels, which get weakened with frequent tests).

The 'golden cross' (marked by light blue circle) of the 50 day EMA above the 200 day EMA is a technical confirmation of a return to a bull market. Does that mean bears have been vanquished, and all dips are buying opportunities?

Not quite. Sensex may be forming a small 'double top' reversal pattern that will be technically confirmed on a fall below the Aug 3rd low of 36911. In case the index does confirm the 'double top', the downward target will be 35250 (which just happens to fall inside the downward 'gap' formed back on Mar 12th).

Daily technical indicators are looking bullish to neutral. MACD is moving sideways after merging with its signal line in bullish zone. ROC has merged with its 10 day MA, and is moving sideways along its '0' line. RSI has dropped to its 50% level. Slow stochastic has dropped from its overbought zone after re-entering it.

Why are FIIs still buying after the index has already gained more than 45% from its Mar '20 low? One of the reasons may be the US Dollar index, which had peaked at 104 on Mar 23rd but is now languishing at 93. DIIs are clearly in profit-booking mode, and they have often outsmarted FIIs at or near market tops. So, caution is advised for those holding long positions.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty closed above its three weekly EMAs in long-term bull territory for the 6th straight week, but again failed to close above the 'support-resistance' zone between 11000-11250. Bear resistance forced a fourth weekly close inside the 'support-resistance' zone.

The 20 week and 50 week EMAs are moving up after forming bullish 'rounding bottom' patterns. The 200 week EMA has also started to move up. Bulls remain on top. However, failure of the index to close above the 'support-resistance' zone has kept bears in the game. A correction down to the 200 week EMA (at 10291) is possible.

Weekly technical indicators are in bullish zones. MACD is rising above its signal line and is well inside bullish zone. RSI is moving sideways above its 50% level. Slow stochastic is sliding down inside its overbought zone. 

Nifty's TTM P/E touched a new lifetime high of 31.42 on Thu. Aug 13 before slipping a bit to 31.09, which remains deep inside its overbought zone. The breadth indicator NSE TRIN (not shown) dropped to the edge of its overbought zone, only to bounce up a little. Some more correction or consolidation is likely.
 
Bottomline? Counter-trend rallies on Sensex and Nifty charts have failed to move above resistance zones after re-entering bull territories. Bulls still have the advantage, but bears have kept them on a leash during the past four weeks. Time to book some profits.

Sensex, Nifty charts (Jul 17, 2020): bears getting bullied by Reliance bulls

FIIs were net buyers of equity on Mon. and Fri. (Jul 13 and 17), but were net sellers on the other three days. Their total net selling was worth Rs 19.59 Billion. DIIs were net buyers on Thu. Jul 16, but were net sellers on the rest four days. Their total net selling was worth Rs 15.84 Billion. 

Sensex and Nifty each gained about 1.2% for the week. Like in the previous week, the indices gained while FIIs and DIIs were both net sellers. Small investors who may have entered the market recently should learn the concept of a stop-loss - otherwise their 'paper' profits can vanish in a hurry.

India's usual trade deficit turned into a surplus in Jun '20 for the first time since Jan '02. Exports contracted 12.4% to US $21.9 Billion; imports contracted 47.6% to $21.1 Billion - leaving a surplus of about $800 Million. The sharp drop in imports indicates a slump in domestic demand.

BSE Sensex index chart pattern

For the second week in a row, the daily bar chart pattern of Sensex spent the entire trading week above its three daily EMAs in bull territory. On Tue. Jul 14, the index broke out below the 'rising wedge' pattern, only to pullback along the lower trend line of the 'wedge' during the rest of the week.

Note that the larger up trend line - drawn through the Mar '20 and May '20 lows remains intact. Only a downward breach of this trend line can bring bears back into the game. On the upside, resistance can be expected from a 640 points downward 'gap' formed on Mar 6th.

Daily technical indicators are in bullish zones. MACD is moving sideways after merging with its signal line. ROC is trying to cross above its 10 day MA. RSI has re-entered its overbought zone. Slow stochastic is about to follow suit.

All four indicators are showing negative divergences by failing to rise higher with the index, which closed at its highest level in 4 months. The index has rallied almost 11500 points (45%) from its Mar 24th low, even as the country is being ravaged by a pandemic. 

The disconnect between a bullish market that has gained mainly on the back of a single stock (RIL), and the grim reality of an economy falling into a recession is staggering. It will take a long time for the economy to recover and corporate earnings to get back on track.   


NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty closed above its three weekly EMAs for the second straight week, and above the 10900 level for the first time in 4 months. Two gaps got filled in the process - the downward 'gap' of week ending Mar 13th, and the upward 'gap' formed last week.

The 20 week EMA has formed a bullish 'rounding bottom' pattern and is poised to cross above the 200 week EMA. On the upside, the 'support-resistance' zone between 11000-11250 can provide bullied bears a last opportunity to put up some resistance.

Weekly technical indicators are looking bullish. MACD continues to rise above its signal line in bearish zone. The signal line has formed a bullish 'rounding bottom' pattern. RSI is slowly rising above its 50% level. Slow stochastic is moving sideways well inside its overbought zone. 

Nifty's TTM P/E has moved up to 28.55, its highest level for the month and well inside its overbought zone. The breadth indicator NSE TRIN (not shown) is hovering in neutral zone, and may limit near-term index upside.
 
Bottomline? Ongoing rallies on Sensex and Nifty charts have overcome important resistance levels and re-entered bull territories. There are clear signs of 'distribution' from strong to weaker hands. Caution is advised.

Sensex, Nifty charts (May 15, 2020): bears regaining control

FIIs were net buyers of equity on Mon. May 11, but net sellers during the next four days. Their total net selling was worth a Rs 59.51 Billion. DIIs were net sellers of equity on Mon.. and Tue., but net buyers on the next three trading days. Their total net buying was worth Rs 10.75 Billion, as per provisional figures.

India's factory output contracted a record 16.7% in Mar '20 (thanks to the lockdown) against an expansion of 4.62% in Feb '20. For FY 2019-20, industrial production contracted 0.7% against 3.8% expansion in FY 2018-19.

Merchandise exports in Apr '20 contracted 60% to US $10.36 Billion. Imports also contracted 59% to $ 17.12 Billion. Trade deficit shrank to $6.76 Billion from $15.33 Billion a year ago.

BSE Sensex index chart pattern

The daily bar chart pattern of Sensex has formed a bearish pattern of 'lower tops, lower bottoms' after forming an 'island reversal' pattern on May 4th. The index closed below its three daily EMAs in a bear market.

By touching an intermediate top of 33887 on Apr 30, the index retraced 49.6% of its fall from the Jan 20 top (42274) to the Mar 24 low (25639) - falling just short of the 50% Fibonacci retracement level that often terminates a bear market rally.

An interesting technical pattern occurred on Wed. May 13 after PM's grand announcement of a 'stimulus package' the previous evening. The index opened with an upward 'gap' above its 20 day EMA, partly closing the downward (island reversal) gap formed on May 4, but failed to overcome the resistance from its falling 50 day EMA.

Part/full closing of a 'gap' is often followed by a continuation of the previous trend. A downward 'gap' below the 20 day EMA formed on Thu. May 14 - confirming the 'rule' and putting bulls in their place. A series of explanations by the FM about details of the stimulus package failed to stimulate the market.

Daily technical indicators are looking neutral to bearish. MACD is about to cross below its signal line in neutral zone. RSI has slipped below its 50% level. Slow stochastic is moving down towards its oversold zone after emerging from it.

What next for Sensex? Expect bulls to remain active till the massive RIL rights issue hits the market on May 20th. The main purpose of the issue is to retire high cost debt with 'no cost' loan from investors. The CMP was pumped up after poor results. The 'discounted issue price' (at a huge premium) is a trap. Here is a history lesson: Why rely on Reliance?

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty took the grand announcement of PM's Rs 20 Trillion economic stimulus in stride, and closed below its three weekly EMAs for the 10th straight week. The index lost about 115 points (1.2%) on a weekly closing basis.

The sharp bear market rally from the Mar '20 low of 7511 terminated at the Apr 30 intermediate top of 9889 - retracing 48.3% of the fall from the Jan '20 top. By falling just short of the 50% Fibonacci retracement level that often terminates bear market rallies, Nifty's chart remained under bear domination. 

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 should occur soon.

Weekly technical indicators are looking bearish. MACD is moving sideways below its falling signal line inside oversold zone. RSI is falling inside bearish zone. Slow stochastic has dropped sharply from its overbought zone. 

Nifty's TTM P/E has moved down to 20.98 but remains above its long-term average. The breadth indicator NSE TRIN (not shown) is oscillating about the edge of its overbought zone, hinting at near-term index consolidation or correction.

Bottomline? Sensex and Nifty charts continue to trade below their respective 200 day and 200 week EMAs in bear markets. Positive corona virus cases are increasing rapidly. Any easing of lockdown restrictions can start a second wave of infections. Small investors should stay on the sidelines and protect their cash.