FIIs were net sellers of equity on all three trading days this week. Their total net selling was worth Rs 25.2 Billion. DIIs were net buyers of equity on all three trading days. Their total net buying was worth Rs 11.7 Billion, as per provisional figures.
India's WPI-based inflation was 1.08% in Aug '19 - the same as in Jul '19 but much lower than 4.62% in Aug '18. Rise in inflation of food items was balanced by deflation in fuel and power.
The Finance Ministry is considering a fourth 'booster' dose to revive a sliding economy, after the first three 'booster' doses failed to generate any significant revival in 'animal spirits'.
For the past seven weeks, the daily bar chart pattern of Nifty has been consolidating sideways with a slight downward bias, touching progressively lower tops. The 'death cross' (marked by grey oval) of the 50 day EMA below the 200 day EMA at the beginning of the month had technically confirmed a bear market.
Bulls are fighting hard, but the resistance zone between 11100 and 11200 has proved to be a tough hurdle. The Aug 23 low of 10637 is in danger of being tested, and breached.
The index had bounced up after testing support from the lower Bollinger Band at the beginning of the month. But the counter-trend rally lost steam after crossing above the middle band (20 day SMA - marked by green dotted line).
Daily technical indicators are in bearish zones. MACD is seeking support from its rising signal line. RSI is below its 50% level. Slow stochastic formed a 'double top' reversal pattern at the edge of its overbought zone, and has dropped sharply below its 50% level.
Nifty's TTM P/E has slipped down to 26.66, but remains inside its overbought zone and much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is oscillating near the edge of its oversold zone, hinting at some near-term index consolidation.
Three 'booster packages' from the Finance Minister have come and gone without making a dent on the bearish sentiment of FIIs. Bulls are hoping for a miracle from our popular leader. But he seems more interested in fiddling around with photo-ops while the economy is sinking.
Q2 (Sep '19) corporate earnings may be worse than Q1 (Jun '19) numbers. The upcoming festive season sales may prevent a total washout. Small investors should be extremely wary about bottom fishing.
FIIs were net sellers of equity on all three trading days this week. Their total net selling was worth Rs 26.1 Billion. DIIs were net buyers of equity on all three trading days. Their total net buying was worth Rs 27.9 Billion, as per provisional figures.
RBI's transfer of Rs 1.76 Trillion surplus to the government has drawn wide-spread criticism from 'Harvard economists'. It is unfortunate that the first action of the 'hard work economists' to tackle the economic slowdown was to put their collective hands inside RBI's till.
As per Moody's, the 'booster package' announced by the Finance Minister on Fri. Aug 23 may boost investor and business sentiments, but won't be able to prevent India's GDP growth to slip to 6.4% for FY 2019-20.
The following remark was made in last week's technical update on the daily bar chart pattern of Nifty: "Nifty's previous (Aug 5) low of 10783 may get tested, and breached."
The day after breaking out below a 'rising wedge' pattern, the index fell below its Aug 5 low of 10783 and closed just below the lower Bollinger Band at 10741 on Thu. Aug 22.
On Fri. Aug 23, Nifty touched an intra-day low of 10637 but bounced up on short-covering after rumours of a 'booster package' from the Finance Minister - forming a 'reversal day' bar (lower low, higher close) that often marks an intermediate bottom.
The effect of the 'booster package' - announced after close of trading on Friday - lasted two days. On Mon. Aug 26, Nifty rallied strongly and closed above its 20 day SMA (middle Bollinger Band - marked by green dotted line).
There was some follow-up buying on Tue. Aug 27, but the index formed a 'doji' candlestick that indicated uncertainty among bulls and bears. An intra-day pullback to the 20 day SMA today and some short-covering before tomorrow's monthly F&O expiry took the index to a close just below 11050.
A dark cloud of resistance is looming overhead (marked by grey oval) - consisting of the upper Bollinger Band and rapidly merging 50 day and 200 day EMAs. The 'death cross' of the 50 day EMA below the 200 day EMA will technically confirm a bear market.
Daily technical indicators are giving mixed signals. MACD is rising above its signal line in bearish zone. RSI has started to fall after facing resistance from its 50% level. Slow stochastic has risen to the edge of its overbought zone. Any further index rally is likely to be short-lived.
Nifty's TTM P/E is at 27.33, which is inside its overbought zone and much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is falling inside its oversold zone, hinting at some near-term index up side.
The 'booster package' from the Finance Minister came 'too little, too late'. No major reform announcements were made. The 'low hanging fruit' (RBI surplus) has been plucked. It will be interesting to see what happens next if the economy continues to slide.
FMCG giant HUL has announced 20-30% price cuts on soaps. Maruti has announced lay-offs. Q1 (Jun '19) results showed continued tepid earnings growth. The only 'animal spirits' visible are of the bearish kind.
FIIs were net sellers of equity on Mon. and Wed. (Aug 19 and 21) but net buyers on Tue. this week. Their total net selling was worth Rs 7.0 Billion. DIIs were net buyers of equity on all three trading days. Their total net buying was worth Rs 10.4 Billion, as per provisional figures.
According to the RBI Governor, moderation in CPI inflation including food, fuel and contraction in merchandise imports is actually reflecting a slowdown in domestic demand. This raises hopes that RBI may cut interest rates more rapidly.
SEBI has decided to simplify and rationalise the existing regulatory framework for FIIs by easing operational constraints and compliance requirements. FIIs will now be recategorised into two classes instead of three.
The daily bar chart pattern of Nifty has broken out below a bearish 'rising wedge' pattern and is poised to fall further. Note that the index had fallen below bearish 'rising wedge' and 'flag' patterns in July '19.
The falling middle Bollinger Band (20 day SMA, marked by green dotted line) provided strong resistance to the index, just as it had done last month during formation of the 'flag' pattern.
The 50 day EMA is falling towards the 200 day EMA, and the space between the two EMAs is decreasing rapidly. A 'death cross' of the 50 day EMA below the 200 day EMA will technically confirm a bear market.
Daily technical indicators are in bearish zones. MACD is moving sideways above its signal line. RSI is falling below its 50% level. Slow stochastic has started to fall after facing resistance from its 50% level. Nifty's previous (Aug 5) low of 10783 may get tested, and breached.
Nifty's TTM P/E is at 27.01, which is inside its overbought zone and much higher than its long-term average. The breadth indicator NSE TRIN (not shown) is rising further inside its oversold zone, hinting at some more near-term index down side.
Piecemeal 'packages' being announced by various clueless government departments are unlikely to change the bearish sentiment prevailing in the stock market.
Demonetisation had broken the back of rural and unorganised sectors. Tax terrorism is now taking a toll on the organised sector. Analysts who are calling a bottom of the economic cycle are just trying to 'talk up' the market.
Small investors should stay on the sidelines, concentrate on wealth protection and start preparing a 'buy list'.
Except Jul 1, FIIs have been net sellers every single day during Jul '19. Their total net selling of equity during the month was worth Rs 198.70 Billion. Except Jul 1, DIIs have been net buyers every single day during Jul '19. Their total net buying of equity during the month was worth Rs 203.90 Billion, as per provisional figures.
The government's fiscal deficit during Apr-Jun '19 touched Rs 4.32 Trillion, which is 61.4% of the budget estimate of Rs 7.03 Trillion for FY 2019-20. During Apr-Jun '18, the fiscal deficit was 68.7% of the budget estimate. Revenue receipts during Apr-Jun '19 was 14.4% of the budget estimate against 15.5% during Apr-Jun '18.
The sad episode of the Cafe Coffee Day founder has been a blow to the coffee sector, and brought 'ease of doing business' - or the lack of it - to the fore. Entrepreneurs take huge risks to set up businesses, and provide jobs to many, but tax terrorism can push the honest ones over the edge. The dishonest flout every rule and get away with it.
The daily bar chart pattern of Nifty is teetering on the brink of a bear market. On Jul 8, 9 and 10 the index had breached the lower Bollinger Band. The subsequent technical bounce faced strong resistance from the middle Bollinger Band (i.e. 20 day SMA - dotted green line) on Jul 17.
Nifty dropped sharply to the lower Bollinger Band on Jul 19. Since then, the index has been sliding down along the lower Bollinger Band - breaching technical supports in quick succession on the back of selling by FIIs.
Two important technical points to note are: (1) a fall below the 200 day EMA (in blue) into bear territory on Jul 24-25, followed by a pullback on Jul 26; (2) a fall below the 200 day SMA (in red) and the previous (May 14) low of 11108 on Jul 30, followed by a pullback today.
Daily technical indicators are looking oversold. MACD is below its signal line and is falling inside its oversold zone. RSI is trying to emerge from its oversold zone. Slow stochastic is moving sideways well inside its oversold zone. Nifty may try to move up to the 11300-11400 zone. Expect bears to 'sell on rise'.
Nifty's TTM P/E has moved down to 27.42, but remains well inside its overbought zone and much higher than its long-term average. The breadth indicator NSE TRIN (not shown) has risen high inside its oversold zone - hinting at some near-term index upside.
The breaches of the 200 day EMA and 200 day SMA are clear indications that Nifty is ready to fall into a bear market. The technical confirmation of a bear market will be provided by the 'death cross' of the 50 day EMA below the 200 day EMA.
Though the 50 day EMA is falling towards the 200 day EMA, it is still 260 points above the long-term moving average. That gives bulls a bit of wiggle room. But avoid bottom fishing. Use any near-term upside to book profits.
Gold chart pattern
The daily bar chart pattern of Gold bounced up from the lower Bollinger Band and crossed above its 50 day EMA, but faced strong resistance from the middle Bollinger Band (20 day SMA, marked by green dotted line).
Gold's price is consolidating near the 1300 level, and managed to close well above its 200 day EMA in bull territory.
Daily technical indicators are looking neutral to bearish. MACD is moving sideways below its signal line in bearish zone. RSI is facing resistance from its 50% level. Slow stochastic remains in bearish zone after recovering from oversold condition.
After a sharp rise above 97.50 on Mar 7, the US Dollar index has dropped below 96.50. That helped gold's price to rally from its Mar 7 low of 1281.
On longer term weekly chart (not shown), gold’s price closed above its three weekly EMAs in long-term bull territory for the 12th week in a row. Weekly technical indicators are showing downward to sideways momentum in bullish zones, hinting at more consolidation or correction.
Silver chart pattern
The following remark was made in the previous post on the daily bar chart pattern of Silver: "Slow stochastic has entered its oversold zone, and can trigger a pullback towards the 200 day EMA."
The expected pullback crossed above the 200 day and 50 day EMAs, but faced strong resistance from the 20 day SMA (middle Bollinger Band, marked by green dotted line). Silver's price is below its three EMAs in bear territory.
Daily technical indicators are looking bearish. MACD is facing resistance from its falling signal line. RSI is below its 50% level. Slow stochastic has emerged from its oversold zone, but is showing downward momentum.
On longer term weekly chart (not shown), silver's price faced resistance from its 50 week EMA, formed a 'long legged doji' candlestick and closed well below its 200 week EMA in a long-term bear market. Weekly technical indicators are in neutral zones, and showing sideways to downward momentum. Some more correction or consolidation may follow.
S&P 500 index chart pattern
The daily bar chart pattern of S&P 500 crossed above the Fibonacci resistance zone between 2640 and 2710 (marked by grey rectangle - refer last week's post) on Mon. Feb 4, and continued its climb along the upper Bollinger Band the next day.
Strong resistance from the 200 day SMA halted further progress of the rally. The index dropped back inside the resistance zone - closing flat for the week.
As long as the index remains above its 20 day SMA (middle band - marked by green dotted line), bulls will endeavour to charge past the 200 day SMA.
Daily technical indicators are correcting overbought conditions, but remain in bullsih zones. MACD and RSI are moving down after facing resistances from the edges of their respective overbought zones. Slow stochastic is about to drop from its overbought zone.
Some more correction or consolidation around current level is likely.
On longer term weekly chart (not shown), the index closed above its three weekly EMAs for the second week in a row, but formed a 'doji' candlestick that often signals a reversal of direction. Weekly MACD has crossed above its signal line in bearish zone. RSI is moving sideways along its 50% level. Slow stochastic is rising towards its overbought zone.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 touched an intra-day low of 7002 on Mon. Feb 4, but soared past the 7100 level to touch an intra-day high of 7181 the next day.
Strong resistance from the falling 200 day EMA prevented further upward progress. Bears stepped in to 'sell on rise'. The index closed below 7100 for the week, but gained 0.7% on a weekly closing basis.
Daily technical indicators are correcting overbought conditions. MACD is above its signal line in bullish zone, but has stopped rising. RSI has turned down after facing resistance from the edge of its overbought zone. Stochastic has dropped down from its overbought zone.
Some consolidation or correction is likely before the index makes another attempt to cross above its 200 day EMA. (At the time of writing this post, the index is trading above 7130.)
On longer term weekly chart (not shown), the index faced strong resistance from its 50 week EMA and dropped down to close below 7100, but stayed above its 20 week and 200 week EMAs in long-term bull territory. Weekly technical indicators are looking bullish. MACD is rising above its signal line in bearish zone. RSI is about to cross above its 50% level. Stochastic has entered its overbought zone.
FIIs were net sellers of equity on all three trading days this week. Their total net selling was worth Rs 29 Billion. DIIs were net buyers on all three days. Their total net buying was worth Rs 22.9 Billion, as per provisional figures.
The net direct tax collection in India grew by 15.7% to Rs 4.89 Trillion YoY during the period Apr - Oct 3rd week, 2018 - meeting 42.5% of the full fiscal year target of Rs 11.5 Trillion.
Tight monetary conditions for NBFCs may soon begin to hit the economy as funds for consumption and investment are slowly getting squeezed. Sale of motorcycles, tractors, plywood and cement have slowed in the past few weeks.
The daily bar chart pattern of Nifty touched an intra-day low of 10102 on Tue. Oct 23 - its lowest level since Mar 28 '18. All gains made during Apr-Aug '18 got wiped out during Sep-Oct '18. The index is trading well below its three falling EMAs in bear territory.
Daily technical indicators are in bearish zones, and are not showing any upward momentum. MACD is facing resistance from its falling signal line inside its oversold zone. RSI is getting support from the edge of its oversold zone. Slow stochastic has re-entered its oversold zone.
Note that all three indicators showed positive divergences by touching slightly higher bottoms, when the index dropped lower. That may have triggered today's upward bounce. Is it possible that the index has formed a small 'double bottom' reversal pattern?
Technically, such a pattern will get confirmation only if Nifty manages to rally past its Oct 17 top of 10710 (where it had faced strong resistance from its falling 20 day SMA and had dropped towards the lower Bollinger Band). The odds for such a rally doesn't favour bulls.
Nifty's TTM P/E has moved down to 24.60, but still remains higher than its long-term average. The breadth indicator NSE TRIN (not shown) is moving down in neutral zone, suggesting some near-term upside.
Oil's price has come down from lofty levels and Rupee's fall against the US Dollar has temporarily stalled. That has provided brief respite to bulls. But FIIs are still in exit mode - so, more downside is likely.
FIIs were net sellers of equity on Tue. Oct 16, but net buyers on the other two trading days this week. Their total net selling was worth Rs 9.6 Billion. DIIs were net buyers on Mon. & Tue. but net sellers on Wed. Oct 17. Their total net buying was worth Rs 10.1 Billion, as per provisional figures.
India's WPI inflation rose to 5.13% in Sep '18 from 4.53% in Aug '18 and an upwardly revised 5.27% in Jul '18. Higher fuel price was the main culprit.
Consumer goods companies are uncertain about the outlook for rural demand as below-normal monsoon rainfall in some states is set to hit income in rural areas.
The daily bar chart pattern of Nifty has reverted back to the control of bears. The counter-trend rally from the lower Bollinger Band came to a screeching halt today.
The index touched an intra-day high of 10710 but faced strong resistances from its 200 day EMA, its 20 day SMA (green dotted line) and the downward 'gap' formed on Oct 4. (The bearish and measuring significance of the 'gap' was discussed in last week's post.)
After an intra-day correction of more than 250 points, the index formed a large 'reversal day' bar and a 'bearish engulfing' candlestick that have put paid to any bullish hopes of a further recovery.
Daily technical indicators have corrected oversold conditions but remain in bearish zones. MACD is facing resistance from its falling signal line. RSI is showing downward momentum. The upward momentum of Slow stochastic has stalled.
Nifty's TTM P/E has moved down to 25.19, but still remains higher than its long-term average. The breadth indicator NSE TRIN (not shown) is moving up in neutral zone, suggesting near-term downside.
All three EMAs are moving down, and the index is trading below them in bear territory. It may be early to call this correction the first leg of a bear market. Technical confirmation will be provided by the 'death cross' of the 50 day EMA below the 200 day EMA, and a 20% fall from the Aug 28 top of 11760 (to 9400).
The correction is far from over. Looks like the index wants to test its downward target of the 'measuring gap' at 9850. A little patience may provide better entry points.
S&P 500 index chart pattern
The following comments were made in the previous post on the daily bar chart pattern of S&P 500: "Despite trading near a lifetime high, the index is facing difficulty in shaking the bears off...A correction towards the lower Bollinger Band remains a possibility."
The index touched the upper Bollinger Band twice - on Mon. (Oct 1) and Wed. (Oct 3) - but corrected sharply below its 20 day SMA (dotted line) to the lower Bollinger Band by Fri. (Oct 5). The index bounced up a bit after receiving good support from its 50 day EMA, but lost about 1% on a weekly closing basis.
The previous occasion when the index dropped to touch the lower Bollinger Band was more than 3 months ago (in end-Jun '18). The index had then consolidated sideways before resuming its up trend. Will the pattern repeat this time? The fact that the index took just a week to wipe out all gains made during the previous three weeks is hinting at a bear resurgence.
Daily technical indicators are looking bearish and showing downward momentum. MACD is falling below its signal line in bullish zone. RSI and Slow stochastic have dropped below their respective 50% levels after forming 'head and shoulders' reversal patterns. Some more correction can't be ruled out.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are suggesting a correction towards its rising 20 week EMA. MACD and Slow stochastic are correcting overbought conditions. RSI is falling in bullish zone.
FTSE 100 index chart pattern
The following comments were made in the previous post on the daily bar chart pattern of FTSE 100: "The three EMAs are converging - a technical condition that is usually a harbinger of a sharp up or down move."
The sharp move occurred downwards - below all three EMAs into bear territory once again. The index managed to close above 7300, but lost more than 190 points (2.5%) on a weekly closing basis.
Daily technical indicators are looking bearish and showing downward momentum. MACD has crossed below its signal line in bearish zone. RSI has dropped below its 50% level. Stochastic has entered its oversold zone, and can trigger a pullback. (At the time of writing this post, the index has slipped below the 7300 level.)
On longer term weekly chart (not shown), the index closed below its 20 week and 50 week EMAs but above its 200 week EMA in a long-term bull market. Weekly technical indicators are looking bearish and showing downward momentum. MACD is falling below its signal line in bearish zone. RSI is falling below its 50% level. Stochastic has entered its oversold zone.
S&P 500 index chart pattern
Possibility of a corrective move towards the lower Bollinger Band was mentioned in last week's post on the daily bar chart pattern of S&P 500. Instead, the index found support at its 20 day SMA (blue dotted line) and consolidated sideways - losing about 16 points (0.5%) on a weekly closing basis.
The index is trading well above its rising 50 day and 200 day EMAs in a bull market, but closed lower in 4 out of 5 trading days during the week. Despite trading near a lifetime high, the index is facing difficulty in shaking the bears off.
Daily technical indicators are in bullish zones, but showing downward momentum. MACD has slipped below its signal line. RSI has fallen towards its 50% level. Slow stochastic has dropped from its overbought zone. A correction towards the lower Bollinger Band remains a possibility.
On longer term weekly chart (not shown), the index closed above its three rising weekly EMAs in a long-term bull market. Weekly technical indicators are looking overbought, and not showing any upward momentum.
FTSE 100 index chart pattern
The daily bar chart pattern of FTSE 100 managed to prevent the 'death cross' of the 50 day EMA below the 200 day EMA by closing above all three EMAs in bull territory, gaining about 20 points (0.3%) on a weekly closing basis.
The merged 50 day and 200 day EMAs have put the brakes on the index rally. At the time of writing this post, the index is trading just 6 points higher.
Daily technical indicators are not giving bulls much hope. MACD is above its rising signal line, but its upward momentum has slowed after entering bullish zone. RSI's up move has stalled after crossing above its 50% level. Stochastic has begun to correct inside its overbought zone.
Expect the index to consolidate a bit longer before it can make a decisive directional move. The three EMAs are converging - a technical condition that is usually a harbinger of a sharp up or down move.
On longer term weekly chart (not shown), the index closed just below its 20 week EMA but above its 50 week and 200 week EMAs in a long-term bull market. Weekly MACD is moving sideways in neutral zone. RSI and Stochastic are also moving sideways near their respective 50% levels.
