Sensex, Nifty charts (Dec 04, 2020): keep rising as FIIs maintain buying momentum

FIIs continued with their strong buying momentum in a holiday-shortened trading week. They were net buyers of equity worth Rs 102.1 Billion. DIIs were net sellers of equity worth Rs 60.9 Billion. Both Sensex and Nifty gained more than 2% on a weekly closing basis.

IHS Markit India's Manufacturing PMI slipped to a 3 months low of 56.3 in Nov '20 from a 12 year high of 58.9 in Oct '20. India's Services PMI also dipped - to 53.7 in Nov '20 from 54.1 in Oct '20. (A reading above 50 indicates expansion.) The composite (Mfg. + Serv.) PMI dropped to 56.3 in Nov '20 from 58 in Oct '20.

As was widely expected, RBI's Monetary Policy Committee left interest rates unchanged and maintained an 'accomodative' stance at its last policy meeting in calendar year 2020.

BSE Sensex index chart pattern

The daily bar chart pattern of Sensex closed at a new high of 45080, as FIIs persisted with their strong buying momentum. The index has gained more than 19000 points (73.5%) from its Mar '20 closing low of 25981.

All three daily EMAs are rising, and the index is trading well above them in a bull market. As long as FIIs keep buying, expect the index to keep rising to new highs.

Daily technical indicators are looking bullish. MACD has merged with its signal line in bullish zone. ROC has crossed above its falling 10 day MA in neutral zone. RSI is about to re-enter its overbought zone. Slow stochastic is rising inside its overbought zone. 

Note that all four daily technical indicators are showing negative divergences by touching lower tops while the index touched a new high. However, large inflow of FII liquidity has been brushing aside all technical headwinds.

A bit of circumspection may be a good idea at this stage. Booking part profits and keeping some cash in hand can provide opportunities to enter at lower price points, as calendar year-end profit booking by FIIs can start at any time.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty rose for the fifth straight week to close at a new high of 13259. Strong buying by FIIs ensured that the index continued its upward climb in blue-sky territory with no known resistances. 

The index is trading well above its three rising weekly EMAs in a long-term bull market. However, such a strong rally may not sustain much longer. Also, year-end profit booking by FIIs may cause a pullback towards 12500.

Weekly technical indicators are looking overbought. MACD is rising above its signal line inside its overbought zone. ROC is rising above its 10 week MA in overbought zone. RSI has re-entered its overbought zone. Slow stochastic is inside its overbought zone but not showing any upward momentum. Some consolidation or correction may follow.

Nifty's TTM P/E touched a new high of 36.46 - which is way above its long-term average and deep inside its overbought zone. The breadth indicator NSE TRIN (not shown) is moving sideways inside its overbought zone. Some near-term index consolidation or correction is possible.

Bottomline? Sensex and Nifty charts are continuing to climb to new highs on the back of FII liquidity inflow. Year-end considerations can lead to some profit booking by foreign fund houses. Book partial profits, or hold existing positions with trailing stop-losses.  

Sensex, Nifty charts (Nov 13, 2020): in blue-sky territories after touching lifetime highs

FIIs continued with their buying spree during the week. They were net buyers of equity worth a massive Rs 198.69 Billion - far exceeding their entire net buying during Oct '20. DIIs were net sellers of equity worth Rs 135.11 Billion. Both indices gained 4.2% to touch lifetime highs.

According to RBI, India's GDP may have slipped into an unprecedented recession by contracting 8.6% during Q2 (Jul-Sep '20), following a 24% contraction during Q1 (Apr-Jun '20). (Two straight quarters of GDP contraction is a thumb-rule definition of a recession.)

India's Index of Industrial Production (IIP) grew at 0.2% in Sep '20 after contracting for six consecutive months. IIP had contracted by 4.6% in Sep '19. However, CPI-based retail inflation rose to 7.61% in Oct '20 - its highest level since May '14 - against 7.34% in Sep '20.

BSE Sensex index chart pattern

During 'muhurat' trading on Sat. Nov 14, the daily bar chart pattern of Sensex rose to touch lifetime intra-day (43830.9) and closing (43638) highs. The index is trading in blue-sky territory (with no known resistances) - well above its three rising daily EMAs in a long-term bull market.

In less than 8 months since touching an intra-day low of 25638.9 on Mar 24 '20, the index has made a spectacular gain of more than 18100 points (71%). However, many small investors who prefer mid-cap and small-cap stocks may be wondering why their portfolios are barely in profit.

The pandemic-induced lockdown and subsequent stuttering economic growth has affected smaller companies a lot more. Larger, well-established companies have been able to utilise tax cuts and lower interest rates to grab more market share from smaller and unorganised companies. The rich have got richer; the poor, poorer.

Daily technical indicators are looking bullish and overbought. MACD is rising above its signal line in bullish zone. RSI is moving sideways inside overbought zone. Slow stochastic is falling inside its overbought zone. While an index can remain overbought for long periods, some consolidation or correction may be around the corner.

Q2 (Jul-Sep '20) results of corporate India have shown clear improvement over Q1 (Apr-Jun '20) as economic activity is returning back towards normalcy post sudden lockdown in Mar '20. Manufacturing activity and credit growth still remains weak. Certain sectors - like hospitality, travel, transportation will take a long time to recover.

High food prices despite a bountiful monsoon is another concern. Sky-high vegetables prices have seriously affected both rural and urban poor. The increasing gap between the rich and the poor does not augur well for a broad-based economic growth. Sooner than later, the stock market indices will revert to mean. 

Till then, extra due diligence is recommended before investing in individual stocks. Those who are already invested in good, diversified portfolios should add to existing holdings on dips but avoid chasing fresh ideas at a market top.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty rose sharply for the second straight week to close at a lifetime high of 12780. Massive buying by FIIs has propelled the index into blue-sky territory with no known resistances. 

Bulls are in total control of the chart. The index is trading well above its three rising weekly EMAs in a long-term bull market. However, caution is advised near a lifetime high. 

A sharp correction had followed after the index had touched its previous top in Jan '20. Such a dramatic correction is unlikely at this stage - specially with FIIs in buoyant buying mood. A more moderate correction or consolidation will improve the technical 'health' of the chart.

Weekly technical indicators are looking bullish and overbought. MACD is rising above its signal line towards its overbought zone. RSI has moved up to the edge of its overbought zone. Slow stochastic has bounced up from the edge of its overbought zone but showing negative divergence by touching a lower top. That may trigger some consolidation or correction.

Nifty's TTM P/E has moved up to 34.73 - which is way above its long-term average and well inside its overbought zone. The breadth indicator NSE TRIN (not shown) has dropped inside its overbought zone. Near-term index upside appears limited.

Bottomline? Sensex and Nifty charts have climbed up to lifetime highs on the back of huge buying by FIIs. Overbought technical indicators can lead to some profit booking. Stay on the sidelines till bullish euphoria subsides. 

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 (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 (Jul 03, 2020): bulls on the verge of regaining control

For the second straight month, FIIs and DIIs were both net buyers of equity, which explains the strong rallies on Sensex and Nifty charts. However, the net buying reduced considerably - to Rs 54.93 Billion (Jun '20) from Rs 139.14 Billion (May '20) for FIIs; and Rs 24.34 Billion (Jun '20) from Rs 122.93 Billion (May '20) for DIIs. 

India's Manufacturing PMI rose sharply to 47.2 in Jun '20 from 30.8 in May '20. Services PMI improved to 33.7 in Jun '20 from 12.6 in May '20. The Composite (Mfg. + Serv.) PMI rose to 37.8 in Jun '20 from 14.8 in May '20. All the numbers were below 50 - indicating contraction.

Automobile sales were disappointing in Jun '20 on a YoY basis. Maruti, Hyundai, Toyota, M&M showed 50-60% sales decline. Two-wheeler sales declined 25-35%. CV segment remained under extreme stress. Only tractor sales showed growth.

BSE Sensex index chart pattern

The bulls are gradually regaining control of the daily bar chart pattern of Sensex. After completely filling the downward 'gap' formed on Mar 12th, the index has moved above its 200 day EMA and the 61.8% Fibonacci retracement level of 35920 into bull territory.

Bears are on the back foot - thanks to net buying by FIIs and DIIs. But they haven't thrown in the towel yet. Why? Because the index has formed a bearish 'rising wedge' pattern during the past four weeks. The likely breakout from such a pattern is downwards.

Daily technical indicators are in bullish zones, but starting to look overbought. MACD is moving sideways in bullish zone along with its merged signal line. ROC has dropped to seek support from its 10 day MA. RSI and Slow stochastic are rising inside their respective overbought zones.

All four indicators are showing negative divergences by failing to rise higher with the index. Remember that a flood of short-term liquidity can overcome technical headwinds. However, the index has already gained more than 40% from its Mar 24th low. It may be better to err on the side of caution.

A global economic recession is looming ahead. India will not be spared. Periodic announcements - like several investments in Jio and launching of virus vaccines by different companies - have stoked bullish sentiment. That may not be able to sustain the rally much further.

Timely profit booking is a discipline that should be followed by small investors. You only make money when you sell at a profit.

NSE Nifty index chart pattern

For the third week in a row, the weekly bar chart pattern of Nifty closed above its 200 week EMA in long-term bull territory, gaining almost 225 points (2.2%) on a weekly closing basis.

The breach of the 200 week EMA is a bullish sign. The index has closed above an important resistance level - the 61.8% Fibonacci retracement level of 10550. However, the zone (10610-10750) between the 50 week EMA and the 76 points downward 'gap' formed in the week ending on May 13th may provide stronger resistance.

Weekly technical indicators are looking bullish. MACD continues to rise above its signal line inside oversold zone. The signal line has formed a bullish 'rounding bottom' pattern. RSI has moved above its 50% level. Slow stochastic is well inside its overbought zone. Caution is advised as the upside risk is increasing. 

Nifty's TTM P/E has moved up to 27.78, which is well inside its overbought zone. The breadth indicator NSE TRIN (not shown) is falling towards its overbought zone. Near-term index upside may be limited.
 
Bottomline? Ongoing rallies on Sensex and Nifty charts are gradually overcoming important resistance levels. Short-term liquidity flows have given bulls the upper hand. Bears are not out of the game. Be prepared for corrective moves at any time.

Sensex, Nifty charts (Jun 19, 2020): facing resistances after sharp rallies

FIIs were net buyers of equity on Thu. and Fri. (Jun 18 and 19) but were net sellers during the first three trading days. Their total net selling was worth Rs 33.2 Billion. DIIs were net sellers of equity on Fri. (Jun 19), but were net buyers during the first four days. Their total net buying was worth Rs 26.6 Billion, as per provisional figures.

After failing to protect India from Chinese incursion in Ladakh, the government has resorted to its overused jingoistic playbook. PSUs and private companies are being asked to ban or cancel orders for Chinese products and services. 

Since China's exports to India comprise only about 2% of its total exports, the jingoism is obviously targetted at the domestic audience. Many Indian companies - particularly in pharma and power sectors - are dependent on Chinese goods and services. Their competitiveness will suffer.

BSE Sensex index chart pattern

The following comments were made in last week's post on the daily bar chart pattern of Sensex: "The index may make another attempt to test resistance from the 'gap' zone. Bulls would do well to curb their enthusiasm."

The index consolidated sideways during the first three trading days, only to jump up on Thu. Jun 18 on the back of combined buying by FIIs and DIIs. Friday's foray inside the 'gap' zone was thanks mainly to Reliance touching a new high on news about fresh foreign investments.

Daily technical indicators are looking bullish. MACD is moving sideways in bullish zone after merging with its signal line. ROC is below its 10 day MA in neutral zone. RSI is moving sideways below its overbought zone. Slow stochastic is moving up towards its overbought zone. 

Note that Sensex closed at its highest level since formation of the downward 'gap' on Mar 12th. However, all four technical indicators failed to touch new highs. The negative divergences - and overhead resistance from the sliding 200 day EMA - can bring the up trend from the Mar 24th low to an end.

China continues to occupy and threaten India's border areas. Pakistan and Nepal are adding to the confusion. Covid 19 virus is spreading fast and not showing any signs of getting controlled. MSMEs are facing severe financial problems. Q1 (Jun '20) corporate results are expected to be a disaster.

RIL, HDFC twins and a handful of other large-cap stocks are boosting the Sensex and luring late-comers into the market. Time to be very circumspect. Protecting capital should be the main goal for small investors.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty rallied to close just above its 200 week EMA, gaining about 270 points (2.7%) on a weekly closing basis. The index had closed below its 200 week EMA for the previous 14 weeks.   

Though the breach of the 200 week EMA is a bullish sign, it hasn't been a convincing breach as yet. In case of further upside, the zone between 10500-10600 may provide resistance.

Weekly technical indicators are looking bullish. MACD is rising above its signal line inside oversold zone. RSI has moved up to its neutral zone. Slow stochastic has risen to the edge of its overbought zone. Some near-term index upside is likely. 

Nifty's TTM P/E has moved up to 25.49, its highest level for the month and well above its long-term average inside overbought zone. The breadth indicator NSE TRIN (not shown) has risen sharply inside its oversold zone. Some more near-term index upside is possible.
 
Bottomline? Bear market rallies on Sensex and Nifty charts are nearing resistance levels. Short-term liquidity flows can give the impression that things are back to normal. An already weak economy has been devastated by the pandemic. The market has already gained 35% from its recent low. Further upside may be limited.

Sensex, Nifty charts (Feb 20, 2020): sideways consolidation continues

In a holiday-curtailed trading week, FIIs were net sellers of equity during the first three days, but net buyers on Thu. (Feb 20). Their total net buying was worth Rs 8.56 Billion. DIIs were net sellers of equity on Mon., Tue. and Thu. (Feb 17, 18 and 20), but net buyers on Wed. (Feb 19). Their total net selling was worth Rs 5.73 Billion, as per provisional figures.

On a YoY basis in Jan '20, India's passenger vehicle, commercial vehicle and two-wheeler registrations contracted by 4.6%, 6.8% and 8.9% respectively. Registrations for three-wheelers and tractors grew by 9.2% and 5.1%.

As per ASPA, India's counterfeit auto parts market was worth Rs 1 Trillion in 2019 -  adversely affecting the automobile industry. Selling spurious parts results in a tax revenue loss of Rs 22 Billion to the government.

BSE Sensex index chart pattern

The daily bar chart pattern of Sensex oscillated about its 20 day and 50 day EMAs, while trading sideways within a range of 800 points during a truncated trading week. The index managed to close above the 41000 level, but lost about 90 odd points on a weekly closing basis.

Daily technical indicators are in neutral zones - not giving any directional signals. MACD is moving sideways above its signal line. RSI is treading water near its 50% level. (Since Nov '19, MACD and RSI have been showing negative divergences by forming bearish patterns of 'lower tops, lower bottoms'.) Slow stochastic is rising towards its 50% level after falling below it.

After touching a lifetime high of 42274 on Jan 20th, and forming a large 'reversal day' bar (higher high, lower close) that often signifies an intermediate top, the index has been consolidating sideways within a 'symmetrical triangle' pattern. 

Sensex may also be completing a two months long 'diamond' pattern. A 'symmetrical triangle' or a 'diamond' pattern can act as a continuation pattern. But they can also act as 'reversal' patterns.

So, will the index breakout upwards or downwards? The negative divergences visible on MACD and RSI - which have touched lower tops for the past four months - may tilt the balance towards bears.

Small investors should keep their bullish bets small and stop-losses tight. It may be prudent to wait for the eventual breakout - which should happen sooner than later - before placing any large buy or sell orders.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty closed above its three weekly EMAs and the psychological level of 12000, but lost about 30 odd points on a weekly closing basis. A bullish pattern of 'higher tops, higher bottoms' - formed during the past 18 months - shows that bulls are dominating.

The index has failed to make any upward progress since touching a lifetime high of 12430 four weeks back. Nifty needs to cross convincingly above 12500 for the bull rally to progress further. However, a slowing economy and a rapidly spreading corona virus has negated bullish fervour.

Weekly technical indicators are looking neutral to bearish. MACD is sliding down below its signal line after falling from its overbought zone. RSI has moved above its 50% level but its upward momentum has stalled. Slow stochastic has crossed above its 50% level after falling below it. 

Nifty's TTM P/E has moved up a bit to 27.50, which is well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) is oscillating about the edge of its oversold zone, hinting at more near-term index consolidation.

Bottomline? After touching lifetime highs in Jan '20, Sensex and Nifty charts have been consolidating sideways. With the budget and Q3 (Dec '19) results out of the way, very few positive triggers are left for the stock market in the near-term. Investors should stay invested, but maintain stop-losses.

Sensex, Nifty charts (Feb 01, 2020): disappointing budget may trigger a deeper correction

For the month of Jan '20, FIIs were net sellers of equity worth Rs 53.6 Billion. They turned net sellers after three straight months of net buying. DIIs were net buyers of equity during Jan '20. Their total net buying was worth Rs 10.7 Billion, as per provisional figures.

The union budget speech by the Finance Minister on Feb 1 was long on sound, sycophancy and needless repetition but short on actionable steps required to boost consumption for stimulating the economy. Investors showed their displeasure by voting with their feet.

Low consumer sentiment continued to affect auto sales in Jan '20. Maruti showed a marginal growth in YoY sales, but Hyundai, M&M and Tata Motors showed negative growth.

BSE Sensex index chart pattern

The daily bar chart pattern of Sensex had touched a lifetime high of 42274 on Jan 20th, but formed a large 'reversal day' bar (higher high, lower close). That had triggered a corrective move below its 20 day and 50 day EMAs.

A disappointing budget led to a 1000 points fall in the index during the special trading session on Sat. Feb 1. The index has found temporary support at its 200 day EMA. Any technical bounce may induce a 'sell on rise' strategy by bears.

Daily technical indicators are looking bearish. MACD is falling below its signal line and has entered bearish zone. RSI is seeking support from the edge of its oversold zone. Slow stochastic has re-entered its oversold zone, but is showing positive divergence by touching a higher bottom. A technical bounce is likely. 

Small investors should remain patient and not rush in to buy the dip. The market may face a major corrective move.

NSE Nifty index chart pattern

The weekly bar chart pattern of Nifty dropped sharply below its 20 week EMA - thanks to a union budget that disappointed the stock market - but found support at its 50 week EMA. For the past 18 months, the index has formed a bullish pattern of 'higher tops, higher bottoms'.

The index is trading well above its rising 200 week EMA in a long-term bull market. However, a weak economy and global concerns about the spreading corona virus has poured cold water on bullish sentiments.

Weekly technical indicators are looking bearish. MACD has dropped from its overbought zone and crossed below its signal line. RSI has dropped below its 50% level. Slow stochastic has dropped from its overbought zone towards its 50% level. 

After touching a high of 28.67 on Jan 13 and Jan 14, Nifty's TTM P/E moved down to 26.41 by the end of the month, but remained well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has re-entered its oversold zone after falling from it. Some more near-term index correction is possible.

Bottomline? After touching lifetime highs in Jan '20, Sensex and Nifty charts look ready for deeper corrections, triggered by a disappointing union budget. There are hardly any positive triggers left for the stock market in the near-term. Small investors should use any rise to book profits and preserve capital.