Sector Technicals for the week ending – 26th September 2014.

Hi All, sorry for the late update but been a little busy over the weekend with some personal work. This weeks update just has the Nifty weekly technical analysis along with the update sector scan table.

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 7850 zone proved to be a good support zone yet again last week - 2 weeks in a row now that we have bounced back from those levels. Momentum reading as per the 14 week RSI has cooled off from the overbought zone and the MACD has triggered a sell. A weekly close below supports of 7850 along with a weakening RSI would be the first red-flag. So far, price action suggests the index can move in a range with supports at 7850-7950 and resistance in the 8150-8200 zones. In the derivatives space, FII’s continue to be net long in index futures and have increased their net longs over the previous week while simultaneously increasing their long positions in put options (this has happened 3 weeks in a row now) suggesting some hedging activity indicative of a moderately bullish to range-bound trading view. Though the India VIX saw a bit of a rise, but it is still in its teens and does not reflect any build-up of risk of downside at the moment.

Nifty - Short Term Timing Model - Updated as of 26th Sep 2014.

Nifty - Short Term Timing Model - Updated as of 26th Sep 2014.

This short term timing model is a long only model which buys and exits the Nifty index based on a 50 day moving average and an additional filter. This strategy will not outperform every year but it keeps one out of possible down-periods and has performed well over a 20 year period. Performance can be boosted by using short call options along with long positions.  

Current signal: Buy given on 12^th Aug 2014 Nifty closing level of 7727.05.

Yearly Performance:  (2014 figures are YTD)

                

Sector Technicals for the week ending – 21st September 2014.

Sector Technicals for the week ending – 21^st September 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:

As mentioned last week, the previous resistance of 7850-7950 acted as a support zone and the index bounced back sharply to close near its resistance zone near 8150-8200 levels. Momentum reading as per the 14 week RSI is in the overbought zone. A weekly close below supports along with a weakening RSI would be the first red-flag. So far, price action suggests the index can move in a range with supports at 7850-7950 and resistance in the 8150-8200 zones. In the derivatives space, FII’s continue to be net long in index futures but have reduced their net longs over the previous week while simultaneously increasing their long positions in put options (this has happened 2 weeks in a row now) suggesting some hedging activity indicative of a moderately bullish to range-bound trading view for the rest of the month. As mentioned last week the India VIX continues to make a new low and unless we see a spike in the India VIX till then it should be smooth sailing for our markets.

Sector Technicals:

CNX Auto: No major change to last week’s view as the Auto index saw another new high and also a new high on the RS line suggesting that the uptrend and outperformance vis-à-vis the Nifty index is still intact. Price action wise looks like the auto index is likely to trade in the price channel as shown below, with major support in the 7200-7300 zones.

 

Bank Nifty: There is a good support zone in the 15500-15600 area. Momentum wise, the RSI reading is inching towards overbought and a strong weekly close along with overbought readings would signal strength in banking stocks. As long as 15500-15600 holds on a weekly closing basis the uptrend is intact. On relative terms, the RS line vs. the Nifty is inching higher with a rising 40 week MA which is supportive of long term outperformance.

CNX Pharma: The Pharma index made a new high and the uptrend remains intact as per the trend-line shown below. A weekly close below 9500 would jeopardize the short/medium term uptrend. However, one should tread cautiously in the Pharma space as the index is highly overbought with a reading of 84 on the 14 week RSI.

CNX FMCG: The FMCG index is above major resistance and ended the week flat. A weekly close below 19,000 would endanger the short term uptrend.  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: As mentioned last week, the IT index is in an uptrend and broke out to new highs. Momentum readings favour the bulls as it is in the overbought zone and with no overhead resistance, the IT index could possibly be a big gainer in the next few weeks. The uptrend is intact as long as long as it trades above the 10400-10500 zone. Though the index has outperformed the benchmark over the last few weeks, on a longer term we would classify it as an outperformer only if its RS line manages to trade above its 40 week moving average.

CNX Infra, Metal, Energy & Realty: These 4 indices are underperformers vs the benchmark of which Infra and Energy look positive on a short term basis as they are trading above supports and have broken above their short term downtrends. Realty and Metals seem to be at a critical juncture – right above prior support and just below their short term downtrend line. A wait and watch approach would be better to see if these 2 indices break either of the zones.   

CNX Small Cap and Mid cap: The Mid cap index underperformed last week but held critical supports of 11400-11500, a weekly close below these supports could make the short term trend suspect. Small caps are still positive as they are trading above an important support zone of 4500-4600 and a weekly closing above the prior resistance of 5500 could lead to a sharp rally to the upside.  

Nifty - Short Term Timing Model - Updated as of 21st Sep 2014.

This short term timing model is a long only model which buys and exits the Nifty index based on a 50 day moving average and an additional filter. This strategy will not outperform every year but it keeps one out of possible down-periods and has performed well over a 20 year period. Performance can be boosted by using short call options along with long positions.  

Current signal: Buy given on 12^th Aug 2014 Nifty closing level of 7727.05.

Yearly Performance:  (2014 figures are YTD)

Nifty - Short Term Timing Model - Updated as of 14th Sep 2014.

This short term timing model is a long only model which buys and exits the Nifty index based on a 50 day moving average and an additional filter. This strategy will not outperform every year but it keeps one out of possible down-periods and has performed well over a 20 year period. Performance can be boosted by using short call options along with long positions.  

Current signal: Buy given on 12^th Aug 2014 Nifty closing level of 7727.05.

Yearly Performance:  (2014 figures are YTD)

                

Update for the week ending – 14th September 2014

Update for the week ending – 14^th September 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:

The uptrend in Nifty is intact as it continues to make higher highs; the previous resistance of 7850-7950 should now act as a support zone going forward. Momentum reading as per the 14 week RSI is in the overbought zone. However, the index can charge higher and still remain overbought as we saw post the election result. So far, price action suggests the index can move higher with supports at 7850-7950 and resistance in the 8150-8200 zones. A violation of these supports might jeopardize the short term uptrend. In the derivatives space, FII’s continue to be net long in index futures but have reduced their net longs over the previous week while simultaneously increasing their long positions in put options suggesting some hedging activity indicative of a moderately bullish to range-bound trading view for the rest of the month. The multi-year low VIX readings seems to be getting a lot of attention in the media, this does not necessarily mean that there could be a crash lurking around the corner, even the S&P 500 has charged higher the last 2 years with low VIX readings. Unless we see a spike in the India VIX till then it should be smooth sailing for our markets.

Sector Technicals:

CNX Auto: No major change to last week’s view as the Auto index saw (another) fresh breakout to new highs and also a new high on the RS line suggesting that the uptrend and outperformance vis-à-vis the Nifty index is still intact. Price action wise looks like the auto index is likely to trade in the price channel as shown below, with major support in the 7200-7300 zones.

 

Bank Nifty: The Banking index also saw fresh breakout to new highs. There is a good support zone in the 15500-15600 area. Momentum wise, the RSI reading is below overbought and can go higher from here, as long as 15500-15600 holds on a weekly closing basis the uptrend is intact. On relative terms, the RS line vs. the Nifty is inching higher with a rising 40 week MA which is supportive of long term outperformance.

CNX Pharma: The Pharma index made a new high but closed flat for the week, we had mentioned a risk of a short term correction/ consolidation as the RSI reading is very overbought at +80 levels!. A weekly close below 9500 would jeopardize the short/medium term uptrend.

CNX FMCG: The FMCG index finally managed to close above its resistance zone of around 19,100-19,300. A weekly close below 19,000 would endanger the short term uptrend.  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 in a uptrend as its broken out to new highs and the uptrend should be intact as long as it trades above the 10400-10500 zone. Though the index has outperformed the benchmark over the last few weeks, on a longer term we would classify it as an outperformer only if its RS line manages to trade above its 40 week moving average.

CNX Infra, Metal, Energy & Realty: These 4 indices are underperformers vs the benchmark of which Infra and Energy look positive on a short term basis as they are trading above supports and have broken above their short term downtrends. Realty and Metals seem to be at a critical juncture – right above prior support and just below their short term downtrend line. A wait and watch approach would be better to see if these 2 indices break either of the zones.   

CNX Small Cap and Mid cap: The Mid cap index has broken out to new highs and the outperformance is likely to continue due to a upward sloping RS line, any closing below 11400-11500 could make the breakout suspect. Small caps are still positive as they are trading above an important support zone of 4500-4600 and a weekly closing above the prior resistance of 5500 could lead to a sharp rally to the upside.  

Update for the week ending – 7th September 2014

Update for the week ending – 7^th September 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:

The uptrend in Nifty is intact as it continues to make higher highs, the previous resistance of 7850 should now act as a support zone going forward. Momentum reading as per the 14 week RSI has entered the overbought zone. However the index can charge higher and still remain overbought as we saw post the election result. So far, price action suggests the index can move higher with supports at 7850-7900. A violation of these supports might jeopardize the short term uptrend. In the derivatives space, FII’s continue to be net long in index futures by more than 150,000 contracts and are also net long in call options suggesting a bullish bias. 

Sector Technicals:

CNX Auto: The Auto index saw fresh breakout to new highs and also a new high on the RS line suggesting that the uptrend and outperformance vis-à-vis the Nifty index is intact. Price action wise looks like the auto index is likely to trade the price channel as shown below, with major support in the 7200-7300 zones.

 

Bank Nifty: The Banking index also saw fresh breakout to new highs and managed to close above the previous highs suggesting a good support zone in the 15500-15600 area. Momentum wise, the RSI reading is below overbought and can go higher from here, as long as 15500-15600 holds on a weekly closing basis the uptrend should be intact.

CNX Pharma: The Pharma index also saw fresh breakout to new highs and managed to close above the previous highs. Momentum wise, the RSI reading is very overbought at 83.6 ! suggesting that we could see a short term correction/ consolidation period in the near future. A weekly close below 9500 would jeopardize the short/medium term uptrend.

CNX FMCG: The FMCG index is struggling at its previous high which is also the resistance zone as we pointed out in the earlier posts. 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 in a strong uptrend as its broken out to new highs and the uptrend should be intact as long as it trades above the 10400-10500 zone. Though the index has outperformed the benchmark over the last few weeks, on a longer term we would classify it as an outperformer if its RS line manages to trade above its 40 week moving average.

CNX Infra, Metal, Energy & Realty: These 4 indices are underperformers vs the benchmark of which Infra and Energy look positive on a short term basis as they are trading above supports and have broken above their short term downtrends. While Realty and Metals could face some pressure going forward.

CNX Small Cap and Mid cap: The Mid cap index has broken out to new highs and the outperformance is likely to continue due to a upward sloping RS line, any closing below 11400-11500 could make the breakout suspect. Small caps are still positive as they are trading above an important support zone of 4500-4600.