Sector Technicals for the week ending – 23rd November 2014.

Sector Technicals for the week ending – 23^rd November 2014.

The below table is just a scan that I run to check the overall trend of an index and its performance vs. the benchmark Nifty. For further information please read the signal description and the detailed sector technical analysis further below. For more information on relative strength please click on the Relative Strength section above.

Nifty Weekly Technical Analysis:

We are back in uncharted territory with a strong weekly close in both the Nifty and Bank-Nifty. The Nifty index closed well above the 8400 zone which it was unable to do so convincingly over the previous 2 weeks. Momentum wise, the RSI indicator is back in the overbought zone and we could see an explosive rally higher (Yeah – the market can remain overbought for extended periods of time !!) and even the MACD is back in the buy mode. Also, many retail accounts are still short in index futures while the FII category continues to increase their net long positions (wondering when the brokers are going to step in and close out the shorts due to margin calls ??). The VIX is still subdued below 14% levels – showing no signs of nervousness as per the options market.  

Sector Technicals:

CNX Auto: The Auto index looks likely to trade within its price channel. But on a relative basis, the RS line of the auto index failed to make a new high and is signalling muted strength in the auto space relative to the Nifty. Also, the MACD has flat-lined which is supportive of the above view.

 

Bank Nifty: The index closed at lifetime highs and on a relative basis the RS line has inched up sharply and we could be setting up for a big rally in banking stocks. Momentum wise the index is in overbought and can stay overbought just like the Auto index did during the start of this year.

CNX Pharma: The index tested its resistance at the re-test zone of its uptrend line. Remaining above the 11000 zone is key to the sustained uptrend in Pharma stocks. 11000 and 10000 are the important supports.   

CNX FMCG: The FMCG index has finally broken-out to the upside, but the index is not likely to outperform the benchmark Nifty as the RS line is still in a downtrend with a downward sloping 40 week moving average.

CNX IT: The IT index is still an underperformer vs. the Nifty as its RS line is below its 40 week MA. Price action wise looks like the index is running into some resistance in the 11,600/ 700 zones.

CNX Infra, Metal, Energy & Realty: Infra and Energy still look positive on a short term basis as they are trading above supports. Metals have run into an important short term resistance zone while Realty has run into resistance around the 220 zone.    

      

CNX Small Cap and Mid cap: The Mid cap index closes the at all-time highs and looks setup for more upside. Small caps are still positive as they are trading above an important support zone of 4500-4600 and a weekly closing below 4600 could lead to a sharp fall with next support zone around 4000.  

Sector Technicals for the week ending – 2nd November 2014.

The below table is just a scan that I run to check the overall trend of an index and its performance vs. the benchmark Nifty. For further information please read the signal description and the detailed sector technical analysis further below. For more information on relative strength please click on the Relative Strength section above.

Nifty Weekly Technical Analysis:

What a week!! I mentioned last week that the break out in Bank-Nifty could lead the Nifty index to all-time highs but did not foresee it happening within a week. Now, the index has broken past its previous highs of 8180 and going forward this should act as the new support zone. We are back in uncharted territory with a strong weekly close in both the Nifty and Bank-Nifty. However, this is a truncated week as we have 2 trading holidays so the coming week could see little price action. On the derivatives side, the VIX is around 13% implying that the options market does not see a volatile November series for now. FII’s increased long positions in the index futures space by about 3,86,000 contracts and we also saw an increase in net longs in the call option space (don’t know why the retailers are trying to pick a top and shorting the index on such a massive breakout !! ). On a longer time frame the 40 week moving average is at 7277 and we have an upward sloping 40 week MA which augurs well.

Sector Technicals:

CNX Auto: The Auto index looks likely to trade within its price channel. But on a relative basis, the RS line of the auto index failed to make a new high and is signalling muted strength in the auto space relative to the Nifty.

 

Bank Nifty: The index closed at lifetime highs and on a relative basis the RS line has inched up sharply and we could be setting up for a big rally in banking stocks. Momentum wise the index is not in overbought, but could enter the overbought range above 70 and could stay overbought just like the Auto index did during the start of this year.

CNX Pharma: The index had broken its uptrend-line shown below and could face resistance at this re-test zone. But if it manages to breakout above the 11000 zone then one could look to increase longs in Pharma stocks.  

CNX FMCG: The FMCG index is not giving any clear signals and it would be better to wait and watch. The FMCG index is not likely to outperform the benchmark Nifty as the RS line is still in a downtrend with a downward sloping 40 week moving average.

CNX IT: The IT index is no longer an outperformer as its RS line is below its 40 week MA. Price action wise – I mentioned last week that the index is back near its supports and can give a tradable bounce from these levels. One can still hold longs in IT space as the index is above crucial supports.

CNX Infra, Metal, Energy & Realty: Infra and Energy still look positive on a short term basis as they are trading above supports. Metals have run into an important short term resistance zone while Realty could trade in a range of 180-220.    

       

CNX Small Cap and Mid cap: The Mid cap index close the week just a tad below its all-time highs but the setup is looking positive for a breakout to the upside. Small caps are still positive as they are trading above an important support zone of 4500-4600 and a weekly closing below 4600 could lead to a sharp fall with next support zone around 4000.