Sector Technicals for the week ending – 1st February 2015

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:

The Nifty failed to cross the 9000 mark and as mentioned previously, the index is trading within the price channel shown below and closed right below the upper price channel. A break below or above this channel will point to a trend/momentum shift. Technically, the MACD is in the buy mode and the 14 week RSI is close to overbought, which can take the market further up as it did post the election results while still being overbought. The VIX closed above the 20% level which is alarming. In the past a weekly closing above 20% on the VIX has led to some turbulence in the Nifty. On the flows front, FII’s are still long in index futures and have closed some longs in index options. Hence, the longer term outlook still remains positive as the index is within its price channel. The VIX above 20% is hinting at some downsides but one could use declines to add to longs at supports near 8500 and 8200.

 Sector Technicals:

CNX Auto: The Auto index is still trading below its lower price channel which was the first sign of caution for the Auto Bulls. The lower price channel could act as a strong supply level going forward. On a relative basis, the RS line is still signalling strength in the auto space relative to the Nifty as long as the RS line is above its 40 week MA.

Bank Nifty: Despite the sell off the banking index held supports and also on a relative basis the RS line is signalling strength in the banking space relative to the Nifty. One can look to increase long exposure in the banking space near supports of 19000.  

CNX Pharma: As mentioned previously, the index is trading below its uptrend line. 11000 was a key resistance zone, which the index took out with ease. The uptrend line could act as a supply zone similar to the Auto index.   

CNX FMCG: The view is still positive with a breakout at the 20,000 level. However, the FMCG space might be relative underperformer vs the Nifty as its RS line is back below its 40 week MA. It would be prudent to wait and see if the RS line can close above its 40 week MA for the next 2-3 weeks so that one can increase longs in this space.

CNX IT: As mentioned previously, the IT index looks likely to trade in a range of 10300 to 11800. A weekly close above the 11800 mark should be seen as a sign of strength and one can look to add to longs in the IT space.

CNX Infra, Metal, Energy & Realty: Infra and Realty indices are looking positive on a short term as both are above important support zones. Metals is testing an important support zone while Energy is at a resistance. It is important to note that none of these indices have a positive crossover of their 10 and 40 week moving averages. It would be better to wait and watch. While Realty has a lot of overhead resistance, the Infra space looks the best out of this lot.     

 

                     

CNX Small Cap and Mid cap: The Mid cap index is still outperforming relative to the Nifty but the RS line for the small caps has closed below its 40 week MA. For the small caps, any break above the 5500 level on the small cap index would be bullish.