Market bull-run? Technicals indicate otherwise
The market is rallying. The S&P CNX Nifty is up 30 per cent, or 800 points, from the low of March 2009. This renewed strength has the mark of a new trend. The sell on rise sentiment has suddenly turned into buy on dips.The market had fallen more than 50% in the past 18 months, with sentiments reaching panic levels at start of March and just before the current rally began as players found valuations cheap.
Even investment guru Mark Mobius, who sees value in stocks and says we're at the start of a new bull market, has said, “You have to be careful not to miss the opportunity.”
But domestic experts are of a different opinion. “The recent rally in Indian markets was entirely directed by the global cues and there is no change in the fundamentals of the domestic economy. Also on the technical front, the six-month closing chart of the Sensex is still lagging behind that of an emerging country like Taiwan,” says Rajesh Chavan, analyst at Global One Advisory.
According to Shubhankar, an independent technical analyst, “There are some contra indications to the current bullishness continuing. The Sensex is still below its 200-day EMA and also below the upper level of 10,950 of the Rectangular Consolidation Chart Pattern of the past five months. While the Sensex had made a higher high at the end of the week (ended April 3), both the ROC and RSI have made lower highs. This is a 'divergence' and indicates a possible correction in the near term,”
J. Moses Harding, executive vice president, head - Global Markets Group, IndusInd Bank, says, “Expectations of RBI maintaining easy liquidity in the near term and good recovery in the Asian bourses arrested the weakness with good demand from domestic investors. The expectation of rate cuts from RBI on the back of lower inflation should hold the downside.”
“Given all these factors, market is expected to move side-ways with a slight upward bias till Q4/FY09 results kick in. Hence in the near term, let us stay tuned to 9,700-10,000 on Sensex (2,990-3,090 on Nifty) with break-out on either side of 9,500-10,700 (2,935-3,355) difficult to sustain. Fleet-footed traders can afford to trade on both sides of the range with tight stop on break-out,” Moses added.
A look at the S&P CNX Nifty chart (below) shows the price is rising, and it has the appearance of health... But trade is seen to be in channel; there's no multi-month breakout developing. Volume looks sickly, and the momentum is erratic and jerky,” said Kapil Mehta, analyst at Flexion Advisory.
“This index needs to rise through 3450 or 200 DSMA for a new bull market. Going by the initial rallies that followed the great bear-market bottoms of 1929, 1938, 1974, and 1982, if this market is to maintain its ascent to 3450, it would be the strongest, sharpest rise in the history of the stock market... even sharper than the bear-market rally that started in late 1929 after the initial crash,” Mehta added.
Commenting on whether it’s the start of a fresh bull run, Anand Sinha of Spark Advisory said, “I think that's unlikely. If this is a new bull market, it's far more likely we'll see the market form a base over the next few months that sets the stage for a breakout later this year.”
“The market's volume pattern is also uneven. Its recent declines have come on huge trading volume but its recent rallies have come on low volume. The momentum - as shown by the Relative Strength Index (RSI) - is strong right now, but it looks jerky and sudden. I would like to see a trend of higher highs and higher lows driving the index higher slowly but surely,” Sinha added.
The Comparative Relative Strength of Nifty 50 to CNX 500...indicates a likely reversal!!!
Fund managers and FIIs might be liquidating banking stocks but one smart investor is making use of the low prices and using the opportunity to its advantage. Life Insurance Corporation of India (LIC) which is a big ticket institutional investor in the Indian stock markets, over the last few days, was seen hiking its stake in two banks.
First was State Bank of India, where through open market purchase, LIC acquired additional 1.34 crore shares of the bank for Rs 1,484.12 crore. This buying was done between November 2008 and March 2, 2009. Post acquisition, LIC's stake in SBI now stands at 9.16%.
The other bank is Indian Overseas Bank. LIC has hiked in this bank to 9.96% after purchasing additional shares worth Rs 57.65 crore through open-market transaction. These shares were purchased between February 19 and March 3, 2009.
Then LIC has hiked its stake in HDFC Bank to 7.105% and in ICICI Bank to 9.38%. It also hiked its stake in PNB to 10%. Prior to these open market purchases, LIC hiked its stake in GAIL to 10.10%. It also hiked its stake in Cummins India to 7.6% via open market purchases.
Apart from all these, LIC holds more than 10% stake in M&M (17.61%), ACC (17.48%), L&T (17.38%), Maruti (14.36%), Reliance Infra (12.99%), Tata Motors (10.27%), Tata Power (11.44%) and Tata Steel (11.56%). And it also reduced its stake in Hindalco, Hindustan Unilever, ITC and Ranbaxy.
higher but the MACD and RSI are in progress of making lower values which result in negative
momentum divergence.. i.e market is moving up in lack of interest. Possibly Profit booking is very near. Its interesting to watch this pattern developing before high the profit booking kicks in
Nifty is making quicker moves in an hurry to test 200day MA(3443 levels) with heavily overbought markets.And Right Now 55 Weekly EMA is coming near 3533(Check Previous Post ). These are the two levels for traders and investors to watch where profit booking could be kicked in.
Nifty is making quicker moves in an hurry to test 200day MA(3443 levels) with heavily overbought markets.And Right Now 55 Weekly EMA is coming near 3533(Check Previous Post ). These are the two levels for traders and investors to watch where profit booking could be kicked in.
The Bulls hold the spectacular grip over the markets and saved the day with de-coupling with the rest of the world. The journey calculators went on counting the points added from the low to the highest but the markets interested to make a new high each time and every time for the last one month.
The correction happened only one day and the rest is internal and intraday. The side lined waiting money woke-up and starts chasing the stocks for now as if we are in a run-up Bull market. The RIIL has again made a 40% gain and the sugar stocks rallied by 15-20%.
The SGX Nifty suggests that the Asian markets are in green with Hang Sang by 1.35% and the Nikkei up by 1.8% and we are likely to open above 3400 with 50-60 points gap up. As suggested in my earlier the Nifty will take a breather here (………The Nifty could be expected to touch 3381-4408 in coming days as the momentum is well in place. The fag end of the run will be fast and surprising.)
The Nifty has good support at 3050 level and very good support at 2960-50 level. The markets rallied enough to cross the hurdles at 3135 and 3280 level. So the fall will become weak and bearish only when Nifty trades below 3000 level. The corrections will be stock specific and the overall markets are in higher orbit.
The Nifty has resistance at 3423 level and the support at 3311-09 and at 3273-71 level.
The Reliance rallied yesterday beyond expectation 1763 and the selling may come at 1787 level. The bottom support will come for today at 1706 and at 1695-91 level. The counter will become weak below 1693 level.
The bear hug counters like BHEL will become very weak below 1495 and it will get short covering if at all only above 1540 level. The other weak counter is Bharti will become weak below 620 level is facing resistance at 670 level. India bulls realest may see some selling pressure above 137-39 level and Rolta will face resistance to cross Rs75-77.
The counters like ICICI which went up on low activity may run up to 393 and to 403-06 level so long it trades above 373 level. It will become weak below 368 level.
The Rel Infra is good above 616 to touch 660 level but will become weak below 603 level. In case the stock shall not trades below 593 will see selling pressure from short sellers and the bull un-winding will accelerate for every 5 rupee fall.
The correction happened only one day and the rest is internal and intraday. The side lined waiting money woke-up and starts chasing the stocks for now as if we are in a run-up Bull market. The RIIL has again made a 40% gain and the sugar stocks rallied by 15-20%.
The SGX Nifty suggests that the Asian markets are in green with Hang Sang by 1.35% and the Nikkei up by 1.8% and we are likely to open above 3400 with 50-60 points gap up. As suggested in my earlier the Nifty will take a breather here (………The Nifty could be expected to touch 3381-4408 in coming days as the momentum is well in place. The fag end of the run will be fast and surprising.)
The Nifty has good support at 3050 level and very good support at 2960-50 level. The markets rallied enough to cross the hurdles at 3135 and 3280 level. So the fall will become weak and bearish only when Nifty trades below 3000 level. The corrections will be stock specific and the overall markets are in higher orbit.
The Nifty has resistance at 3423 level and the support at 3311-09 and at 3273-71 level.
The Reliance rallied yesterday beyond expectation 1763 and the selling may come at 1787 level. The bottom support will come for today at 1706 and at 1695-91 level. The counter will become weak below 1693 level.
The bear hug counters like BHEL will become very weak below 1495 and it will get short covering if at all only above 1540 level. The other weak counter is Bharti will become weak below 620 level is facing resistance at 670 level. India bulls realest may see some selling pressure above 137-39 level and Rolta will face resistance to cross Rs75-77.
The counters like ICICI which went up on low activity may run up to 393 and to 403-06 level so long it trades above 373 level. It will become weak below 368 level.
The Rel Infra is good above 616 to touch 660 level but will become weak below 603 level. In case the stock shall not trades below 593 will see selling pressure from short sellers and the bull un-winding will accelerate for every 5 rupee fall.
Use it learn & Learn to make money and convey the same to others.
Above is a weekly chart showing the trend line resistance and below is the daily chart showing the 200 day moving average (yellow). The RSI remains above the overbought zone but there is no negative divergence yet.
The situation is getting ripe for shorting this market as there are multiple evidences - the 200 day average, trend line resistance, A/D ratio above 2.8, high readings of % of stocks above 10, 20 and 50 day averages etc.But the market may show some dips only to surprise again and trap the shorts. It will be better to wait and watch and let the market show some real weakness before entering into any short positions - one would really like to see a close below 3150 to go short.
Above is a weekly chart showing the trend line resistance and below is the daily chart showing the 200 day moving average (yellow). The RSI remains above the overbought zone but there is no negative divergence yet.The situation is getting ripe for shorting this market as there are multiple evidences - the 200 day average, trend line resistance, A/D ratio above 2.8, high readings of % of stocks above 10, 20 and 50 day averages etc.But the market may show some dips only to surprise again and trap the shorts. It will be better to wait and watch and let the market show some real weakness before entering into any short positions - one would really like to see a close below 3150 to go short.
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