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

Sector Technicals for the week ending – 26^th October 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 price action on the index was mixed over the last 2 weeks, with a breakdown the week before and a negation of that last week. The Bank-Nifty however is at life time highs and banks having the largest weight in the Nifty could push the Nifty higher near all-time highs. On the derivatives side, the VIX slipped back below 13% and FII’s increased long positions in the index futures space and we also saw an increase in net longs in the call option space. On a longer time frame the 40 week moving average is at 7226 and we have an upward sloping 40 week MA which augurs well.

Sector Technicals:

CNX Auto: Like the Nifty, the Auto index also showed volatile/mixed moves over the last 2 weeks by breaking below its price channel and then closing the week back above its lower trend line. On a relative basis, the RS line of the auto index made a new high and is signalling continued strength in the auto space.

 

Bank Nifty: After giving mixed signals over the past 2-3 weeks 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 rally in banking stocks.

CNX Pharma: The index has broken its uptrend-line shown below but the 10000 zone seems like a good support zone to increase longs in pharma stocks. 

CNX FMCG: The FMCG index is also not giving any clear signals and it would be better to wait and watch if the index manages to give 2 successive weekly closes above or below the 19000 mark. 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 back below its 40 week MA. Price action wise the index is back near its supports and can give a tradable bounce from these levels.

 

CNX Infra, Metal, Energy & Realty: Infra and Energy still look positive on a short term basis as they are trading above supports. Realty and Metals look the weakest as they are at/below important supports.   

      

CNX Small Cap and Mid cap: The Mid cap index outperformed last week and managed to close above critical supports of 11400-11500. The next support zone lies around 11000 and then 10500. 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.