Indian-Equities

More bullishness continued today, inspite of uninspiring overseas cues.  After some consolidation between 3300 and 3400 for last few sessions, Nifty took out 200 SMA with ease and on great cash market volumes above 20000 cr.  So 200 SMA is conquered, and can now be used as the new reference point for further upmove or consolidation.

Now it seems Indian market is not in race with US markets, not Europe, but China ... yes the big guy across the Himalayas.  See the SSE chart at link here.

The way stocks are flying could seem as if this is last stage of a bull market.  But we are nowhere near there, so this is a special case of bullishness within a overall bear market, or whatever name one wants give it...

1. AD ratio is so strong that it needs to be checked when it was last this way.

2. NH-NH has turned positive.  It has deceived earlier in 2008, but it can be watched from now on.  If it stays mostly positive for a few weeks, then it may indicate the bear market is over.

I was not looking at market so closely during last few days due to other work.  Here is an analysis of broad market and Nifty compared to 5 and 20 trading days before.  The rows in bold give sense of market strengthening in short term.  The average stock is outperforming the Nifty in last few days.  The advance decline is very strong too.  Volumes in cash market have surged

This probably means any correction if at all may be sideways, to 3250 maybe.  During that time, individual stocks may continue to sparkle and give more opportunities.

After a profit taking day, it is good to check how broad market is doing.

1. The AD ratio has been good in last 5 trading sessions.

2. No of stocks > 50 DMA is now > 400 for 2 days in a row.   Bodes well for broad market, and the negative sentiment which remained for almost 2 months after Satyam fiasco is not not there anymore.

Nifty has advanced 8.6% in 5 trading sessions from 2573 on 9^th Mar to 2794 today. 

Following table gives information on Nifty percent changes and stocks AD ratio over 5 days. That information is based on day to day comparison.

Later in the table it gives up and down % changes over 5 days. So Today figure in Up % 5 Days refers to % change from price 5 days ago i.e. D-5. D-1 figure refers to % change from D-6. It will be easier to figure out from table given below.

Nifty made a quick attempt to cross 50 Day MA in morning trade but failed from there.  It was expected since it would have been a miracle to rise so fast in a short time and then close above 50 DMA in a jiffy!

What's more interesting is the way NH-NL has moved sharply from -390 on 6-Mar to -36 today.  It points to strengthening in broad market.  An almost about turn from a few months low to near 0 levels!

AD ratio has been doing rather well.  Even today value of 0.95 is not bad for a down day and volatile one at that.

BSE Auto Index: The best index in terms of recent strength.  All the doomsday scenario about Indian economy is not in evidence here.

BSE Bankex. The laggard of Nifty.  If it does not go down a lot from here that will be good enough.

Reliance and ONGC are the two big daddies of Nifty.  So Nifty movements cannot diverge significantly from what these 2 are doing.

Reliance chart below shows a broad range with upsloping trendlne at bottom.  That upslope in trendline means in fact that Nifty is being supported between 2500-2600 by Reliance.  Other indices like Bankex and Capital goods index might be doing badly in recent past but they cannot bring Nifty down on their own.

I have attached the chart below and to me the pattern looks good, with consolidation happened over several months, followed by a breakout, and now further consolidation for 5-6 days now.

However, the red volume spikes are a bit of dampener. Usually they say price is more important than volume, but since volume picture is not comforting so is it better to wait for dip closer to previous resistance of 196 level.?  That would be a lower risk entry.

The other option is to enter now with SL below 200 levels which is low of several days.

After 2 holidays, good volumes seen in both cash and NF.  NF vol for last 4-5 days are quite good in fact.

I have now added information for 5 days at a glance.  I plan to post the table some days of the week when there is some insight in data.  With 5 days of information, one will be able to see the trend and values from previous days too.