FIIs were net sellers of equity on all five trading days of the week. Their total net selling was worth a huge Rs 107.20 Billion. DIIs were net buyers of equity on all five days. Their total net buying was worth Rs 100.93 Billion, as per provisional figures.
After touching an 8-year high of 55.3 in Jan '20, India's Manufacturing PMI slipped to 54.5 in Feb '20. (A figure above 50 indicates expansion.) However, India's Services PMI rose from 55.5 in Jan '20 to a 7-year high of 57.5 in Feb '20. The Composite (Manufacturing + Services) PMI rose from 56.3 in Jan '20 to 57.6 in Feb '20.
As per CMIE, India's unemployment rate rose to 7.78% in Feb '20 - highest in 4 months - from 7.16% in Jan '20. In rural areas, unemployment rate increased to 7.37% in Feb '20 from 5.97% in Jan '20; in urban areas, it fell to 8.65% from 9.7%.
BSE Sensex index chart pattern
Note the following comments from last week's post on the daily bar chart pattern of Sensex:
"... worrisome for bulls is the 336 points downward 'gap' formed on Fri. Feb 28. 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."
"A technical bounce towards 39000 is a possibility."
By touching a low of 37011 on Fri. Mar 6, the initial downward target of 37100 was met. The index pulled back past 39000 to touch an intra-day high of 39083 on Mon. Mar 2, but failed to fill the downward 'gap' formed on Feb 28.
After sideways consolidation below the 'gap' during the first four days of the week, the index formed another larger downward 'gap' of 640 points on Fri. Mar 06. Two downward gaps within a short time is usually treated as a single 'gap' for measuring purposes - giving a new downward target of 36300.
On Sep 19 '19, Sensex had touched an intra-day low of 35988. That is close to 36000. So, there is a possibility that the index may find an interim bottom in the zone between 36000-36300. Why? Because back-to-back downward gaps is often a sign of selling exhaustion.
Daily technical indicators are in bearish zones and looking oversold. MACD is falling deeper inside its oversold zone. RSI has re-entered its oversold zone. However, Slow stochastic has emerged from its oversold zone, hinting at a pullback to partly or completely fill the downward 'gap' formed on Fri. Mar 6.
The 20 day EMA (in red) has crossed below the 200 day EMA (green). The impending 'death cross' of the 50 day EMA (blue) below the 200 day EMA will technically confirm a bear market.
Government's decision to bail out Yes Bank may be good news for depositors - despite the withdrawal limitation - but not so good news for bond holders and equity shareholders. Banking sector stocks were hammered by bears on Friday, perhaps undeservedly.
Small investors should wait and watch. If Sensex breaches 36000, it can fall to its 200 week EMA (currently at 34800).
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty continued to fall after breaking out below a 'diamond' reversal pattern, and closed below the psychological level of 11000 after 6 months. A bullish pattern of 'higher tops, higher bottoms' - formed during the past 18 months - is just about intact.
The index is still trading above its rising 200 week EMA in a long-term bull market. However, the rapidly spreading corona virus has curbed bullish enthusiasm, particularly of FIIs, who have been huge net sellers of equity during the past couple of weeks.
Weekly technical indicators are looking bearish and showing downward momentum. MACD has dropped sharply to its neutral zone. RSI and Slow stochastic are poised to enter their respective oversold zones. The correction may last a bit longer before a technical bounce can occur.
Nifty's TTM P/E has moved down to 25.01, but remains above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) had dropped to the edge of its overbought zone on Wed. Mar 4, but has since risen sharply to re-enter its oversold zone. A near-term index pullback or some consolidation is possible.
Bottomline? Sensex and Nifty charts have corrected more than 12.5% from their respective lifetime highs touched on Jan 20th. Widening fiscal deficit and weak economic growth compounded by corona virus fears and fiasco in the financial sector have wreaked havoc on investor sentiment. Small investors should avoid bottom fishing and stay on the sidelines.
After touching an 8-year high of 55.3 in Jan '20, India's Manufacturing PMI slipped to 54.5 in Feb '20. (A figure above 50 indicates expansion.) However, India's Services PMI rose from 55.5 in Jan '20 to a 7-year high of 57.5 in Feb '20. The Composite (Manufacturing + Services) PMI rose from 56.3 in Jan '20 to 57.6 in Feb '20.
As per CMIE, India's unemployment rate rose to 7.78% in Feb '20 - highest in 4 months - from 7.16% in Jan '20. In rural areas, unemployment rate increased to 7.37% in Feb '20 from 5.97% in Jan '20; in urban areas, it fell to 8.65% from 9.7%.
BSE Sensex index chart pattern
Note the following comments from last week's post on the daily bar chart pattern of Sensex:
"... worrisome for bulls is the 336 points downward 'gap' formed on Fri. Feb 28. 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."
"A technical bounce towards 39000 is a possibility."
By touching a low of 37011 on Fri. Mar 6, the initial downward target of 37100 was met. The index pulled back past 39000 to touch an intra-day high of 39083 on Mon. Mar 2, but failed to fill the downward 'gap' formed on Feb 28.
After sideways consolidation below the 'gap' during the first four days of the week, the index formed another larger downward 'gap' of 640 points on Fri. Mar 06. Two downward gaps within a short time is usually treated as a single 'gap' for measuring purposes - giving a new downward target of 36300.
On Sep 19 '19, Sensex had touched an intra-day low of 35988. That is close to 36000. So, there is a possibility that the index may find an interim bottom in the zone between 36000-36300. Why? Because back-to-back downward gaps is often a sign of selling exhaustion.
Daily technical indicators are in bearish zones and looking oversold. MACD is falling deeper inside its oversold zone. RSI has re-entered its oversold zone. However, Slow stochastic has emerged from its oversold zone, hinting at a pullback to partly or completely fill the downward 'gap' formed on Fri. Mar 6.
The 20 day EMA (in red) has crossed below the 200 day EMA (green). The impending 'death cross' of the 50 day EMA (blue) below the 200 day EMA will technically confirm a bear market.
Government's decision to bail out Yes Bank may be good news for depositors - despite the withdrawal limitation - but not so good news for bond holders and equity shareholders. Banking sector stocks were hammered by bears on Friday, perhaps undeservedly.
Small investors should wait and watch. If Sensex breaches 36000, it can fall to its 200 week EMA (currently at 34800).
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty continued to fall after breaking out below a 'diamond' reversal pattern, and closed below the psychological level of 11000 after 6 months. A bullish pattern of 'higher tops, higher bottoms' - formed during the past 18 months - is just about intact.
The index is still trading above its rising 200 week EMA in a long-term bull market. However, the rapidly spreading corona virus has curbed bullish enthusiasm, particularly of FIIs, who have been huge net sellers of equity during the past couple of weeks.
Weekly technical indicators are looking bearish and showing downward momentum. MACD has dropped sharply to its neutral zone. RSI and Slow stochastic are poised to enter their respective oversold zones. The correction may last a bit longer before a technical bounce can occur.
Nifty's TTM P/E has moved down to 25.01, but remains above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) had dropped to the edge of its overbought zone on Wed. Mar 4, but has since risen sharply to re-enter its oversold zone. A near-term index pullback or some consolidation is possible.
Bottomline? Sensex and Nifty charts have corrected more than 12.5% from their respective lifetime highs touched on Jan 20th. Widening fiscal deficit and weak economic growth compounded by corona virus fears and fiasco in the financial sector have wreaked havoc on investor sentiment. Small investors should avoid bottom fishing and stay on the sidelines.
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