Nifty Technical Analysis

FIIs CONTINUE SELLING, MKT FALLS TO 3065

22 Oct 2008

Summary

Seems that the market is repeating last week’s pattern. In the last week, Bulls were leading for Monday and Tuesday, while the rest of the days were controlled by Bears. Market is following a similar pattern right now, as the first two days of this week were in green and today market ended in red. According to fundamentalists, the investors haven’t gained enough faith in the market and that is why FIIs are continuously pulling out money from Indian Markets, which is pulling down the market.

Day Statistics

Technical Analysis

Fig. 1 Nifty Intra-day Price Movement Chart on 22 Oct 2008

Figure 1 displays the Nifty intraday movement on 22 Oct 2008. The market was in a Bearish mood today, as from the starting of the session it was touching new lows. Bulls tried hard enough to pull up the market, but the FIIs were supporting the Bears and therefore Bulls could bring in some small corrections and the market closed at 3065.15, making a fall of 169.75 points or 5.25% from the previous close level.

Fig. 2 Nifty Daily Price Movement Bar Chart till 22 Oct 2008

Figure 2 displays the Nifty daily price movement till 22 Oct 2008. The descending triangle pattern is still present with the green line as the base line. At the first look at figure 2, it may seem that the market has crossed the base line, but still the movement is less than 5% and therefore it is not sure that the Bearish phase has started. Another point to note from figure 2 is that the market has started moving sideways, and has found a support and resistance at 3045.40 and 3240 (shown as blue and black line in figure 2) respectively.

Fig. 3 ADX for Nifty till 22 Oct 2008

Figure 3 displays the ADX for Nifty till 22 Oct 2008. The ADX graph is slowly turning horizontal, indicating starting of consolidation phase in the coming sessions. It has reached a height of 67, and it seems that it is the highest point and ADX will start falling soon.

Fig. 4 MACD for Nifty till 22 Oct 2008

Figure 4 displays the MACD for Nifty till 22 Oct 2008. MACD has again started favoring the Bears, as the MACD line has started moving downwards and is thus shifting away from the EMA(9) line; therefore reducing the chances of any crossover taking place. Thus, according to this indicator the chances of a Bullish phase have reduced further.

Conclusion

My advice to all the readers is to stay out of the market for some time. The fundamentals also suggest that the markets are expected to be volatile in the coming sessions, while the direction of movement is unknown. As per the current trend lines, the market is expected to move up a bit. Therefore, high risk-taking individuals can take new positions and earn some profit.

MKT IN GREEN, BULLS EXPECTED TO CONTINUE THEIR STAY

21 Oct 2008

Summary

Bulls extended their stay in the market for one more day and forced the market to close in green. Fundamentals were fully supporting the Bulls, as during the entire session only twice the market actually went below the previous close level. Rest of the time market was touching new heights followed by small corrections, and finally closed at 3234.90.

Day Statistics

Technical Analysis

Fig. 1 Nifty Intra-day Price Movement Chart on 21 Oct 2008

Figure 1 displays the Nifty intraday movement on 21 Oct 2008. Market made a 50 point leap as soon as it opened but the sellers were ready to balance this buying pressure and within some time the market went below the previous close line. The same pattern repeated again, but after that there was no stopping to the Bulls. The market touched new levels, with some corrections in between and finally closed 112 points or 3.59% above the previous close.

Fig. 2 Nifty Daily Price Movement Bar Chart till 21 Oct 2008

Figure 2 displays the Nifty daily price movement till 21 Oct 2008. It is clear from figure 2 that the market is not following the trend lines anymore. However, the descending triangle pattern is still active. One more new pattern is identified – inverse head and shoulders. The red line in figure 2 is the neckline, and as can be seen that the left shoulder and the head are almost complete, only the right shoulder is pending. Once this pattern is established and the market crosses the neckline then it will mark the starting of the Bull phase.

Fig. 3 ADX for Nifty till 21 Oct 2008

Figure 3 displays the ADX for Nifty till 21 Oct 2008. Following yesterday’s move, the ADX line has slowed down a bit and has started following a round path. It is possible that soon ADX may start falling down, and a consolidation phase may appear in the market.

Fig. 4 MACD for Nifty till 21 Oct 2008

Figure 4 displays the MACD for Nifty till 21 Oct 2008. There are some interesting developments to note from the MACD graph. The MACD line has started moving sideways while the EMA(9) line is still moving with its head down and thus it is possible that within some sessions a crossover might take place, marking the starting of the Bullish phase.

Conclusion

My advice to all the readers is that Nifty is facing a resistance at 3350. Once it crosses this level, Bullish phase will start. Therefore, at this point of time it is better to wait for the market to cross this level. However, if the risk appetite is high then invest straight away because the market is expected to follow the world markets and thus move in green in tomorrow’s session.

BULLS CLOSE MKT IN GREEN, REDUCTION IN REPO RATE MAY FURTHER BOOST BULLS

20 Oct 2008

Summary

After an entire week, Bulls entered the market and market ended in green. It had happened on last Tuesday that market was under the control of Bulls, after which Bears led the market and market was moving in deep red from Wednesday onwards. It is expected that Bulls might get a support from the fundamentals, as RBI has reduced the Repo rate – the rate at which banks borrow from RBI – to add liquidity to the market. Thus, there are high chances that market will close in green in the coming sessions.

Day Statistics

Technical Analysis

Fig.1 Nifty Daily Price Movement Bar Chart till 20 Oct 2008

Figure 1 displays the Nifty daily price movement till 20 Oct 2008. The market is still following both the trend lines and the descending triangle pattern. Only change is that the support line has shifted to somewhere in between 3050 and 3100. Due to the steps taken by RBI to induce liquidity, it seems that Bulls will be able to break the resistance of the trend line and move in upward direction.

Fig. 2 ADX for Nifty till 20 Oct 2008

Figure 2 displays the ADX for Nifty till 20 Oct 2008. ADX has continued moving upward and has reached a level of 65.42. It can be seen from the figure that the rate at which ADX was rising has reduced a bit, giving signals of consolidation phase soon.

Fig. 3 MACD for Nifty till 20 Oct 2008

Figure 3 displays the MACD for Nifty till 20 Oct 2008. While the bar chart is supporting Bulls in the coming sessions, MACD as always is moving against it. MACD has distanced further from the EMA(9) line, and thus is stopping the Bulls from entering and controlling the market.

Conclusion

My advice to all the readers is to keep a close watch on the market. The resistance level is at 3350, while the support level is in between 3050 and 3100. It is better to take actions, only when the market crosses these levels.

WEEK ENDS IN RED, MKT EXPECTED TO FALL FURTHER

17 Oct 2008

Summary

The week ended with Bears leading the Bulls, as the market was still trading in red. This week started in green as there were high expectations of FIIs entering the market but within two days the investors realized that it was just an illusion because FIIs were simply pulling out money from Indian markets. Therefore, from Wednesday onwards the market had been touching new lows. Fundamentalists are expecting that market may make an upward movement on Monday.

Week Statistics

Day Statistics

Technical Analysis

Fig. 1 Nifty Intra-day Price Movement Chart on 17 Oct 2008

Figure 1 displays the Nifty intraday movement on 17 Oct 2008. As soon as the market movement, a buying pressure was identified, and this took the market to the day’s high in the very first hour of the session. But the sellers reacted pretty quickly to this pressure, as within minutes the market started falling down, below the previous close and closed at 3074.35, 195 points below the previous close.

Fig. 2 Nifty Daily Price Movement Bar Chart till 17 Oct 2008

Figure 2 displays the Nifty daily price movement till 17 Oct 2008. As can be seen from figure 2, the market is still following the trend lines (brown lines in fig 2). As of now, the market has touched the resistance level of the trend line, therefore it is expected that the market will move in negative on Monday. However, if the market crosses the resistance level of 3500, then there are chances of Bulls re-entering the market. Also, the descending triangle pattern is still active, therefore once the market moves below support level of 3030, it will enter the strong Bearish phase.

Fig. 3 ADX for Nifty till 17 Oct 2008

Figure 3 displays the ADX for Nifty till 17 Oct 2008. ADX has continued moving in upward direction and has touched a new level of 63.73, indicating strong trending phase of the market.

Fig. 4 MACD for Nifty till 17 Oct 2008

Figure 4 displays the MACD for Nifty till 17 Oct 2008. Even MACD has continued its earlier movement and has shifted further away from the EMA(9) line. Also, it has become almost parallel to the EMA(9) line making it difficult for the Bulls to takeover.

Conclusion

It is expected that market will fall further in coming sessions and thus it is better to stay out of the market until a Bullish signal is encountered. Once the market crosses the resistance level of 3500, the investors can enter the market as crossing this level will mark starting of the Bullish phase.

MKT CLOSES IN RED, BULLISH PHASE DELAYED

16 Oct 2008

Summary

Market continued its move in red even for today and thus proved that there is still time left before Bulls can come into action. According to the fundamentals, the global markets are trading weak and the US economy is taking time to gain stability, which is forcing FIIs to withdraw investments from Indian markets. Therefore, at least one thing is clear from the market movements that in this phase investments should be made with a long-term perspective, as the market is not moving in favor of swing traders.

Day Statistics

Technical Analysis

Fig. 1 Nifty Intra-day Price Movement Chart on 16 Oct 2008

Figure 1 displays the Nifty intraday movement on 16 Oct 2008. Markets continuing their movement from yesterday, continued moving in red as soon as the market opened. After some time, a wave of upward movement was identified but it was just a correction wave, after which market again started falling. Again at 1 pm, the market started rising up, but missed touching the previous close level by some points. As soon as the market started falling after reaching this level, the session came to an end, closing the market at 3269.30, 69.10 points below the previous close.

Fig. 2 Nifty Daily Price Movement Bar Chart till 16 Oct 2008

Figure 2 displays the Nifty daily price movement till 16 Oct 2008. Referring to figure 2, the descending triangle pattern is still present and therefore, still a support is present at 3200. Further, it can be seen that a trend has been identified, which is marked with the help of trend lines (brown lines in figure 2). Both these indicators are signaling that the Bears will continue in action and if the market crosses the support level (at 3200), then it will further encourage the Bears in controlling the market.

Fig. 3 ADX for Nifty till 16 Oct 2008

Figure 3 displays the ADX for Nifty till 16 Oct 2008. ADX, as expected, has reached a new level of 60.60. I don’t think there is a need to mention that the market is still moving in the trending phase.

Fig. 4 MACD for Nifty till 16 Oct 2008

Figure 4 displays the MACD for Nifty till 16 Oct 2008. A new development can be noticed in figure 4. The MACD line has become almost parallel to the EMA(9) line, thus making it difficult for a crossover to happen. Until and unless a crossover takes place, the Bearish phase will not end and thus Bulls will not get a chance to enter the market.

Conclusion

My advice to all the readers is to better stay out of the market, as this is not the right time to invest. It’ll take some time for the US economy to settle down, only after which a Bullish phase may appear. However, investors can invest in the market but only on a long-term basis.

WEAK GLOBAL MKTS FORCE MKT TO CLOSE IN RED, NIFTY DOWN 180 PTS

15 Oct 2008

Summary

Today Bears were successful in outshining the Bulls, and as a consequence the markets closed in deep red, 180 points below the previous close. Fundamentalists are explaining this move due to weak global markets, and pointed out that Indian markets are simply following global markets. Also, the FIIs have not reacted positively to the new P-Note laws. This is clear from the fact that FIIs are continuously pulling out money and the local investors are trying to balance this outflow by taking new positions. But it seems that the outflow is more than the inflow, which is giving strength to the Bears.

Day Statistics

Technical Analysis

Fig. 1 Nifty Daily Price Movement Bar Chart till 15 Oct 2008

Figure 1 displays the Nifty daily price movement till 15 Oct 2008. It seems that the inverse head and shoulders pattern (that I had mentioned in my last analysis) has lost its significance. However, it seems that the market is in a mood to follow a double bottom pattern. There are also chances of formation of a descending triangle pattern. Both these patterns indicate that there are chances of market finding support at 3200.

Fig. 2 ADX for Nifty till 15 Oct 2008

Figure 2 displays the ADX for Nifty till 15 Oct 2008. While the Bulls and Bears are fighting like cats and dogs, ADX is in no mood of slowing down. It is still in the rising phase, and is touching new heights everyday. After today’s market movement, ADX has reached a level of 57.66, and is still pointing towards the trending phase of the market.

Fig. 3 MACD for Nifty till 15 Oct 2008

Figure 3 displays the MACD for Nifty till 15 Oct 2008. MACD graph is further strengthening the Bears in the coming sessions. The MACD line hasn’t stopped shifting away from the EMA(9) line, and is still moving with its nose down. If it continues like this, then the market will continue moving in the Bear phase.

Conclusion

Both fundamentals and technicals are indicating that there is time for Bulls to come in action. Looking at global markets, it can be said that the Bears are all prepared to pull the market further down. And thus, I suggest that it is better to wait outside the market till the right signals appear.

BULLS CONTINUE FOR THE 2ND DAY, MAY GET FURTHER PUSH BY FIIs

14 Oct 2008

Summary

Today’s market was overall a downward movement but full of ups and downs. This movement was due to disappointment of investors as FIIs did not enter the market as expected. It seems that they are taking a bit longer to react to new P-Note laws, which is worsening the conditions here. Point to note is that Dow and NASDAQ are trading in green; therefore there are high chances that Nifty will continue trade in green in coming sessions.

Day Statistics

Technical Analysis

Fig. 1 Nifty Intra-day Price Movement Chart on 14 Oct 2008

Figure 1 displays the Nifty intraday movement on 14 Oct 2008. As the market opened, Bulls were still in action from last session as within few minutes, the market touched the day’s high. But soon after that, Bears took the lead and market started falling down and finally ended at 3518.65, 27 points or 0.8% above the previous close. This move from day’s high to close was full of corrections, some being major (like at around 11.30 am and 1.30 pm) and some being minor.

Fig. 2 Nifty Daily Price Movement Bar Chart till 14 Oct 2008

Figure 2 displays the Nifty daily price movement till 14 Oct 2008. In my last analysis, I had mentioned a trend line which had restricted the market movement and which will signal the direction of market in coming sessions. As can be seen in Figure 2, the market has crossed the resistance line and thus it is expected that the market will continue moving in the upward direction for at least some sessions. It can also be noticed that the market is moving in an inverted head and shoulder pattern, and only the right shoulder is pending. If the market continues moving like this, then it will mean a long-term Bull phase. Both these signals are indicating Bullish phase in coming sessions.

Fig. 3 ADX for Nifty till 14 Oct 2008

Figure 3 displays the ADX for Nifty till 14 Oct 2008. Continuing yesterday’s move, the ADX value has reached a level of 54.96, which means that the market is moving in high trending phase. Also to note, the ADX graph is slowly becoming vertical i.e. the rate at which the ADX is rising has increased. This means that the market will continue moving in the trending phase for a long time.

Fig. 4 MACD for Nifty till 14 Oct 2008

Figure 4 displays the MACD for Nifty till 14 Oct 2008. As expected, MACD has turned horizontal and it seems that it is waiting for EMA(9) line to cross and move below the MACD line. If such a crossover happens, then it will mark the starting of the Bullish phase.

Conclusion

The market has started moving up, and it is expected that it will continue moving further up. New investments from FIIs are expected in the market in coming sessions, which will further push the market up. Even the global markets are supporting the Bulls. Therefore, my advice to all the readers is to take new positions in the market as this is the time to book profits.

MKT CLOSES GREEN, CHANCES OF FIIs RE-ENTERING MKT

13 Oct 2008

Summary

After a gap of 10 days, the Bulls entered the market and controlled it, thus closing it in green. The market had been continuously trading in red from a long time due to weak global markets and continuous pullout of money by the FIIs from Indian markets. Even promises like bailout package, introduction of new P-note laws were not able to help the markets in any manner. From tomorrow onwards, the new P-note laws will be in action. I think today’s market movement was due to an optimistic view towards the new laws. There is a general perception among Indian Investors that FIIs will re-enter Indian markets from tomorrow onwards and thus market may see an upward movement. Thus, they are buying new positions to earn profits from this upward movement.

Day Statistics

Technical Analysis

Fig. 1 Nifty Intra-day Price Movement Chart on 13 Oct 2008

Figure 1 displays the Nifty intraday movement on 13 Oct 2008. Market opened few points below the previous close, but the Bulls took over and made the opening price as the day’s low. From this time onwards, the market started rising and there was no stopping back. Even the corrections on the way were minor ones, and at no time one could doubt the direction of market.

Fig. 2 Nifty Daily Price Movement Bar Chart till 13 Oct 2008

Figure 2 displays the Nifty daily price movement till 13 Oct 2008. A new trend pattern is identified in the market movement, shown as parallel red lines in figure 2. As per this trend, the market will move in a range of roughly 375 points. This particular trend has already been proved by the market around 4 times and right now it is the time to simply wait and watch when the market breaks either the support or the resistance line.

Fig. 3 ADX for Nifty till 13 Oct 2008

Figure 3 displays the ADX for Nifty till 13 Oct 2008. The ADX graph has continued rising and has reached a level of 51. Looking at the graph, it seems that the market will continue moving in the trend phase for a long time as the graph has almost turned vertical.

Fig. 4 MACD for Nifty till 13 Oct 2008

Figure 4 displays the MACD for Nifty till 13 Oct 2008. This is the only graph that is still supporting Bears, as the MACD line is still far away from the EMA(9) line. However, the MACD line has bent a little bit and there are chances that within some sessions a crossover may take place marking the starting of the Bullish Phase.

Conclusion

My advice to all the readers is to wait and watch when the market breaks the support/resistance line, and take actions accordingly. If the market breaks the support line then it’ll mean continuation of Bear phase, and thus better sit out of the market; else if the market crosses the resistance line, then buy new positions as Bull phase is about to start. According to fundamentalists, the new P-note laws will attract FIIs and thus there are high chances that market will break the resistance line, and enter the Bullish phase.

MKT IN BEAR CONTROL, WEAK GLOBAL CUES AND FIIs HELD RESPONSIBLE

08 Oct 2008

Summary

In response to the movement of Bulls on 08 Oct 2008, Bears pushed the market down and forced it to break the support levels. In the later half of the session, Bulls tried to recover the market but failed to bring the market above the previous close, thus ending the market at 3515, 93 points below the previous close. Fundamentalists are considering FIIs responsible for such a move, as they are continuously pulling out money. This is due to the fact that the new policy laid down by SEBI regarding P-Notes is still hazy.

Day Statistics

Technical Analysis

Fig. 1 Nifty Intra-day Price Movement Chart on 08 Oct 2008

Figure 1 displays the Nifty intraday movement on 08 Oct 2008. The Bears took the charge as soon as the markets opened, and as a result market touched the day’s low at around 12 noon. After the market touched this level, Bulls entered the market, but it seems that Bears were pretty angry due to the defeat they faced in the last session, and thus Bulls could only bring in some corrections and the market closed in red.

Fig. 2 Nifty Daily Price Movement Bar Chart till 08 Oct 2008

Figure 2 displays the Nifty daily price movement till 08 Oct 2008. This graph brings along bad news for the Bulls, as it is giving strong indications of continuation of Bearish phase. The market in today’s move broke the trend lines (proposed in last analysis), thus indicating Bearish phase. Further, the figure also displays Bollinger Band (two blue lines in figure 2). The market has started falling below the lower envelope, therefore there pointing towards continuation of Bears in the market in coming sessions. The strength of these signals is supported by the ADX graph. As if this is not enough, other graphs are also supporting Bears.

Fig. 3 ADX for Nifty till 08 Oct 2008

Figure 3 displays the ADX for Nifty till 08 Oct 2008. ADX has reached a height of 44.42, and is continuously rising thus pointing that the market is still moving in the trending phase. There was a slowdown noticed in the ADX movement, but now ADX has again gained pace and is again moving smoothly. Thus, the market will continue moving in the trending phase for a long time.

Fig. 4 MACD for Nifty till 08 Oct 2008

Figure 4 displays the MACD for Nifty till 08 Oct 2008. Continuing its movement, the MACD line has shifted further away from the EMA(9), therefore supporting the Bears. Point to note is that both the lines are moving in the negative region.

Conclusion

There is nothing new in the market, as the Bears are gaining strength with every session and the market is touching new lows. There are chances that implementation of new P-note laws may act as the silver line. Till then, I think it is better to wait and watch the market movement.

RBI AND WALL STREET SUPPORT BULLS, MKT ENDS GREEN

07 Oct 2008

Summary

Today Nifty, after lots of ups and downs, ended 4.25 points above the previous close. Bulls started the day but Bears were not lagging much as within the first hour the market started falling. Today’s market movement was a very exciting one, as the market was making sharp sudden ups and downs. As per fundamentalists, the day’s move was supported by two reasons – Wall Street ending in green and the CRR cut by RBI. But an interesting point to note is that while Nifty ended in green, BSE Bulls lost against Bears as Sensex closed 106 points below the previous close.

Day Statistics

Technical Analysis

Fig. 1 Nifty Intra-day Price Movement Chart on 07 Oct 2008

Figure 1 displays the Nifty intraday movement on 07 Oct 2008. Today’s market movement clearly represented a tough fight between the Bulls and the Bears. While the Bulls started the day and took the market to the day’s high, Bears intervened in the very first hour and within an hour brought the market in red. This particular movement was repeated again, ending with market trading in deep red. But Bulls had enough reasons (read Wall Street and CRR cut) to help the market bounce back and thus after enough effort, the market was trading in green in the last hour.

Fig. 2 Nifty Daily Price Movement Bar Chart till 07 Oct 2008

Figure 2 displays the Nifty daily price movement till 07 Oct 2008. There is a very important trend to note after today’s market movement. The two pink lines in figure 2 are the trend lines representing the band in which the market is trending right now. The market has already proved the existence of these trend lines in the last week. Now is the time to simply watch when the market breaks any of these lines, and starts moving in a particular direction. One more trend is identified in the market movement, as from 25 September onwards the market has been moving in the Bearish phase for continuously 3 sessions followed by 2 sessions in Bullish phase. There are some chances that similar pattern will be repeated. Market has already traded in red for 3 sessions, and also it has touched the lower trend line. Therefore there are high chances of market closing in green in tomorrow’s session.

Fig. 3 ADX for Nifty till 07 Oct 2008

Figure 3 displays the ADX for Nifty till 07 Oct 2008. The ADX graph further strengthens the trend lines, as the current value of ADX is 42. This means the market is safely moving in the trending phase, thus confirming the trend lines. Just to note that the rate at which ADX was rising has decreased and there are chances of a consolidation phase in the coming sessions.

Fig. 4 MACD for Nifty till 07 Oct 2008

Figure 4 displays the MACD for Nifty till 07 Oct 2008. From the day when the market has entered the trending phase, this particular graph has been supporting Bears. Even today, things have changed; in fact it is getting worse day by day. MACD has further shifted away from the EMA(9), thus indicating Bearish phase in coming sessions. If MACD continues moving like this, then soon market will break the lower trend line and will enter a strong Bearish phase.

Conclusion

My advice to all the readers is that there are chances of market being Bullish at least for tomorrow. Therefore, closely watch the first 2 hours of tomorrow’s trading session and take decisions accordingly. If the Bulls are leading, then take new positions, but don’t forget to put a stop loss at today’s closing level. If Bears are leading, then it’ll mean starting of a strong Bearish phase, thus better to stay out of the market.