FIIs were net buyers of equity on Tue., Wed. and Fri. (Feb 4, 5 and 7) but net sellers on Mon. and Thu. (Feb 3 and 6). Their total net selling was worth Rs 9.8 Billion. DIIs were net buyers of equity during the first four trading days, but net sellers on Fri. Their total net buying was worth Rs 22.8 Billion, as per provisional figures.
India's Manufacturing PMI rose to 55.3 in Jan '20 from 52.7 in Dec '19. Services PMI also climbed to 55.5 in Jan '20 from 53.3 in Dec '19. (A figure above 50 indicates expansion.) The Composite PMI (Manufacturing + Services) rose to 56.3 in Jan '20 from 53.7 in Dec '19. This is good news for job seekers, as most of the demand came from the domestic market.
RBI maintained its accommodative stance while maintaining status quo on interest rates (repo and reverse repo). CRR was relaxed for a few specific sectors to boost growth.
BSE Sensex index Chart pattern
The daily bar chart pattern of Sensex had dropped to seek support from its 200 day EMA on Feb 1 after the budget disappointed the stock market. An oversold Stochastic oscillator had hinted at a technical bounce.
Short covering turned the expected technical bounce into a sharp rally that propelled the index above its 20 day and 50 day EMAs before Friday's pullback. The index is back above its three EMAs in a bull market.
Daily technical indicators are not looking all that bullish. MACD is facing resistance from its signal line in bearish Zone. RSI is seeking support from 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 has risen sharply to enter its Overbought Zone, and may not stay there for long. Some more correction or consolidation is possible. A breach of the Feb 3 low of 39563 - should it occur - will be quite bearish.
Small investors should remain cautious and ignore calls by experts to focus on mid-cap and small-cap stocks. Focus on the best performing large-cap stocks even though they may appear expensive.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty bounced up strongly after receiving good support from its 50 week EMA due to a short-covering rally. A bullish pattern of 'higher tops, higher bottoms' formed during the past 18 months remains intact.
The index closed above the psychological level of 12000, and is trading above its three weekly EMAs in a long-term bull market. However, caution is advised as a weak economy and the rapidly spreading corona virus may exert downward pressure on stock indices.
Weekly technical indicators are looking neutral to bearish. MACD has dropped from its overbought zone and crossed below its signal line. RSI has moved above its 50% level after falling below it last week. Slow stochastic dropped from its overbought zone after forming a 'double top' reversal pattern, and has fallen below its 50% level.
Nifty's TTM P/E moved up to 27.03, which is well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has dropped from its oversold zone. Some more near-term index consolidation or correction is likely.
Bottomline? After touching lifetime highs in Jan '20, Sensex and Nifty charts have been in corrective modes. With hardly any positive triggers left for the stock market in the near-term, the indices may fall lower. A recent RBI Consumer Confidence survey findings temper any optimism about a growth turnaround. Investors should increase liquidity by booking profits wherever available.
India's Manufacturing PMI rose to 55.3 in Jan '20 from 52.7 in Dec '19. Services PMI also climbed to 55.5 in Jan '20 from 53.3 in Dec '19. (A figure above 50 indicates expansion.) The Composite PMI (Manufacturing + Services) rose to 56.3 in Jan '20 from 53.7 in Dec '19. This is good news for job seekers, as most of the demand came from the domestic market.
RBI maintained its accommodative stance while maintaining status quo on interest rates (repo and reverse repo). CRR was relaxed for a few specific sectors to boost growth.
BSE Sensex index Chart pattern
The daily bar chart pattern of Sensex had dropped to seek support from its 200 day EMA on Feb 1 after the budget disappointed the stock market. An oversold Stochastic oscillator had hinted at a technical bounce.
Short covering turned the expected technical bounce into a sharp rally that propelled the index above its 20 day and 50 day EMAs before Friday's pullback. The index is back above its three EMAs in a bull market.
Daily technical indicators are not looking all that bullish. MACD is facing resistance from its signal line in bearish Zone. RSI is seeking support from 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 has risen sharply to enter its Overbought Zone, and may not stay there for long. Some more correction or consolidation is possible. A breach of the Feb 3 low of 39563 - should it occur - will be quite bearish.
Small investors should remain cautious and ignore calls by experts to focus on mid-cap and small-cap stocks. Focus on the best performing large-cap stocks even though they may appear expensive.
NSE Nifty index chart pattern
The weekly bar chart pattern of Nifty bounced up strongly after receiving good support from its 50 week EMA due to a short-covering rally. A bullish pattern of 'higher tops, higher bottoms' formed during the past 18 months remains intact.
The index closed above the psychological level of 12000, and is trading above its three weekly EMAs in a long-term bull market. However, caution is advised as a weak economy and the rapidly spreading corona virus may exert downward pressure on stock indices.
Weekly technical indicators are looking neutral to bearish. MACD has dropped from its overbought zone and crossed below its signal line. RSI has moved above its 50% level after falling below it last week. Slow stochastic dropped from its overbought zone after forming a 'double top' reversal pattern, and has fallen below its 50% level.
Nifty's TTM P/E moved up to 27.03, which is well above its long-term average in overbought zone. The breadth indicator NSE TRIN (not shown) has dropped from its oversold zone. Some more near-term index consolidation or correction is likely.
Bottomline? After touching lifetime highs in Jan '20, Sensex and Nifty charts have been in corrective modes. With hardly any positive triggers left for the stock market in the near-term, the indices may fall lower. A recent RBI Consumer Confidence survey findings temper any optimism about a growth turnaround. Investors should increase liquidity by booking profits wherever available.
This post first appeared on Stock Market Charts | India Mutual Funds Investmen, please read the originial post: here
