Technicals for week ending – 17th March 2017.

Note : This is not a recommendation and I am not a registered analyst, these are just data points and an assessment of the positives and negatives from a longer term point of view.

Nifty Weekly

All the basic filters/scans indicate a positive environment but the discretionary side says to err on the cautious side. Nifty, Bank-Nifty, Mid & Small cap indices are in all time high territory – hence no point standing in front of a fast moving train and try and catch the top.

Chart 1 Nifty & all indices except Pharma are above their 40-week MA.

Chart 2 Nifty-Bond ratio is above its 40-week MA and has surpassed the 2016 highs.

Chart 3 Longer term intermarket strength continues in Metals & Energy. Auto has lost a lot of relative strength.

Chart 4 Avg. & Median distance of all sectors from their 52 week closing highs is at -2.3% & -1.3%

Chart 5 FII remain long in Index futures. 

Sector Momentum Update

Updating the short-term momentum model for the week ending 17^th March 2017.

Auto Index –Underperform ?

Latest data set suggests that the Auto Index could see lacklustre performance compared to other sectoral indices. Not doing anything different, just following the process like we did for the previous write ups done below -

http://indiasectortechnicals.blogspot.ae/2016/11/energy-index-potential-outperformer.html

http://indiasectortechnicals.blogspot.in/2015/11/auto-index-setting-up-for-outperformance.html

http://indiasectortechnicals.blogspot.in/2016/04/pharma-in-trouble.html

Process: We are just dividing each sector index by one another and applying a moving average filter to check if the numerator is outperforming or underperforming. So, in this case just like the one’s above, the Auto Index is divided by all sector indices and if the ratio is above the 40-week moving average then the Auto index is outperforming and when the ratio charts are above or below the moving average filter against all Indices then that becomes very important as it is signalling a possible shift in sector preferences. This exact scenario played out in the Pharma Index in April 2016 and has been a lackluster performer ever since. Also, in November 2016 the Energy Index did something similar but the ratios were above the moving average, hence signalling longer term outperformance.

This is just a probability thing and if the ratio’s start to improve then obviously, that will signal a change and Auto stocks will be back in favor.

Anyways, below are the ratio charts and you can see that the Auto/sector ratios are below their respective moving average filter for all except the Auto/Pharma ratio as Pharma has done nothing since long so the denominator did not change much.

Do keep in mind that since these are weekly charts & data so this is analysis is more longer term oriented.