FIIs
were net buyers of equity on all five trading days. Their total buying was worth a huge Rs 139.27 Billion (which exceeded their net buying for the entire month of May '20). DIIs
were net buyers of equity on Tue. and Fri. (Jun 2 and 5), but were net sellers on the other three days. Their total net selling was worth Rs 16.0 Billion, as per provisional figures.
India's Manufacturing PMI rose to 30.8 in May '20 from 27.4 in Apr '20. The Services PMI rose to 12.6 in May '20 from a dismal 5.4 in Apr '20. The Composite (Mfg. + Serv.) PMI rose to 14.8 in May '20 from 7.2 in Apr '20. (All the numbers remained well below 50, which indicates contraction.)
Passenger vehicle sales slumped 85% YoY in May '20. Maruti, Hyundai, Toyota, M&M reported more than 80% drop in their wholesale numbers. A silver lining was a 2% increase in M&M tractor sales.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex rode on the back of strong FII buying to close above its 20 day and 50 day EMAs, with a weekly gain of more than 1850 points (5.7%). Can the index continue to rally? It certainly can if FIIs remain active bulls.
However, some technical headwinds may stall the rally soon. Note the downward 'gap' that had formed on Mar 12th and was partly filled the next day. Since then, Sensex has remained below the 'gap' and faced resistance from it three days in a row during the week.
Even if the 'gap' gets completely filled, further upward progress will come up against strong resistances from the falling 200 day EMA and the 61.8% Fibonacci retracement level (35920) of the entire fall from the Jan 20th top of 42274 to the Mar 24th low of 25639.
Daily technical indicators are looking bullish and overbought. MACD has crossed above its signal line to enter bullish zone. ROC has slipped down from its overbought zone. RSI and Slow stochastic are inside their respective overbought zones. Near-term index upside appears limited.
Mid-cap and small-cap stocks have started rallying. That is usually a sign that retail investors are entering the market. The index has already rallied almost 35% from its Mar 24th low, but still remains below its sliding 200 day EMA in a bear market.
The economy is in doldrums. Corona positive cases are climbing higher each day. Service industry has been decimated. Job and salary cuts are increasing. Large share issues from RIL, Bharti, Kotak Bank have sucked liquidity from the secondary market. These are not conducive for a stock market rally.
Low interest rates, deferment of loan payments, easy availability of credit and a torrent of global liquidity seems to be funneling into India's stock market for quick gains instead of funding capital expenditure and manufacturing. This will not end well for newcomers.
If you were lucky or smart (or both) to have entered the market in late March-early April, this may be a good time to take some profit and remain invested with tight stop-losses. Fresh investments are not recommended at this stage.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty formed an upward 'gap' and climbed past its 20 week EMA but stopped short of its sliding 200 week EMA. The index gained more than 550 points (5.8%) for the week - thanks to huge FII buying - but closed below its 200 week EMA for the 13th straight week.
Weekly technical indicators are looking bullish and showing upward momentum. MACD has crossed above its signal line inside oversold zone. RSI and Slow stochastic are in neutral zones (just below their respective 50% levels). Some more near-term index upside is possible.
Nifty's TTM P/E has risen to 23.91, which is above its long-term average and inside overbought zone. The breadth indicator NSE TRIN (not shown) has dropped inside overbought zone. Near-term index upside may be limited.
Bottomline? Sensex and Nifty charts have been rallying for the past two weeks on the back of FII buying, but continue to trade in bear territory. Technical resistance levels may stall the rallies soon. It may be a good idea to book partial profits, and get rid of portfolio underperformers.
India's Manufacturing PMI rose to 30.8 in May '20 from 27.4 in Apr '20. The Services PMI rose to 12.6 in May '20 from a dismal 5.4 in Apr '20. The Composite (Mfg. + Serv.) PMI rose to 14.8 in May '20 from 7.2 in Apr '20. (All the numbers remained well below 50, which indicates contraction.)
Passenger vehicle sales slumped 85% YoY in May '20. Maruti, Hyundai, Toyota, M&M reported more than 80% drop in their wholesale numbers. A silver lining was a 2% increase in M&M tractor sales.
BSE Sensex index chart pattern
The daily bar chart pattern of Sensex rode on the back of strong FII buying to close above its 20 day and 50 day EMAs, with a weekly gain of more than 1850 points (5.7%). Can the index continue to rally? It certainly can if FIIs remain active bulls.
However, some technical headwinds may stall the rally soon. Note the downward 'gap' that had formed on Mar 12th and was partly filled the next day. Since then, Sensex has remained below the 'gap' and faced resistance from it three days in a row during the week.
Even if the 'gap' gets completely filled, further upward progress will come up against strong resistances from the falling 200 day EMA and the 61.8% Fibonacci retracement level (35920) of the entire fall from the Jan 20th top of 42274 to the Mar 24th low of 25639.
Daily technical indicators are looking bullish and overbought. MACD has crossed above its signal line to enter bullish zone. ROC has slipped down from its overbought zone. RSI and Slow stochastic are inside their respective overbought zones. Near-term index upside appears limited.
Mid-cap and small-cap stocks have started rallying. That is usually a sign that retail investors are entering the market. The index has already rallied almost 35% from its Mar 24th low, but still remains below its sliding 200 day EMA in a bear market.
The economy is in doldrums. Corona positive cases are climbing higher each day. Service industry has been decimated. Job and salary cuts are increasing. Large share issues from RIL, Bharti, Kotak Bank have sucked liquidity from the secondary market. These are not conducive for a stock market rally.
Low interest rates, deferment of loan payments, easy availability of credit and a torrent of global liquidity seems to be funneling into India's stock market for quick gains instead of funding capital expenditure and manufacturing. This will not end well for newcomers.
If you were lucky or smart (or both) to have entered the market in late March-early April, this may be a good time to take some profit and remain invested with tight stop-losses. Fresh investments are not recommended at this stage.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty formed an upward 'gap' and climbed past its 20 week EMA but stopped short of its sliding 200 week EMA. The index gained more than 550 points (5.8%) for the week - thanks to huge FII buying - but closed below its 200 week EMA for the 13th straight week.
Weekly technical indicators are looking bullish and showing upward momentum. MACD has crossed above its signal line inside oversold zone. RSI and Slow stochastic are in neutral zones (just below their respective 50% levels). Some more near-term index upside is possible.
Nifty's TTM P/E has risen to 23.91, which is above its long-term average and inside overbought zone. The breadth indicator NSE TRIN (not shown) has dropped inside overbought zone. Near-term index upside may be limited.
Bottomline? Sensex and Nifty charts have been rallying for the past two weeks on the back of FII buying, but continue to trade in bear territory. Technical resistance levels may stall the rallies soon. It may be a good idea to book partial profits, and get rid of portfolio underperformers.
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