Sector Technicals for the week ending – 8th 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:

As mentioned previously, the Index was vulnerable to downsides as the VIX was above 20%. 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 net long in index futures and have not increased short positions in the Index. Hence, the longer term outlook still remains positive as the index is within its price channel. The VIX above 20% is still hinting at some downsides in the short term but one could use declines to add to longs at supports near the 8500-8600 range. Next support zone is around 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. The weakening MACD does not bode well and is signalling muted returns 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: The banking index could not hold support of 19000. One can look to increase long exposure in the banking space on a successful close above 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. The MACD is strengthening which could indicate a shift into defensive's.

     

CNX FMCG: The view is still positive with a breakout at the 20,000 level. The FMCG space has signalled relative outperformance vs the Nifty as its RS line is back above 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, 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.

 

                       

CNX Small Cap and Mid cap: The Mid cap index is still outperforming relative to the Nifty but looks likely to test its next support zone around the 12000 level. For the small caps, any break above the 5500 level on the small cap index would be bullish.