Sector Technicals for the week ending – 4th January 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 before, the 8150-8200 zone is a key support for the short to medium term and the index managed to close well above 8300 and seems to be trading in the price channel as shown below. The 14 week RSI is well below overbought. However, the MACD is in sell mode. The VIX is still at about 14%. In the derivatives space FII’s increased long positions in index futures and in index put options suggesting some hedging of long positions. To sum it up – Indicators are showing weakness/ pause but price performance wise the Nifty looks positive as long as it trades above the lower channel, also in terms of flows the FII positions are still on the long side suggesting a positive bias.

Sector Technicals:

CNX Auto: The Auto index broke below its lower price channel which should be the first sign of caution for the Auto Bulls. 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. The MACD is in sell mode and the index is trading below is lower price channel. One can look out to book profits/ reduce exposure to Auto stocks at this juncture. A move back above the lower price channel would be a medium-long term positive.

 

Bank Nifty: The banking index closed at an all-time high and also on a relative basis the RS line is signalling strength in the banking space relative to the Nifty. Important supports are at 18000 while long term supports are place above 16000.  

CNX Pharma: The index is trading below its uptrend line and resistance of 11000. With the MACD in sell mode looks likely that the Pharma index is going to trade in a range of 10000-11000.  

  

CNX FMCG: The view is positive with a breakout at the 20,000 level. However, the FMCG space might be a relative underperformer as its RS line is back below its 40 week MA.

  

CNX IT: The IT index is still an underperformer vs. the Nifty as its RS line is below its 40 week MA. Price action wise, the index looks likely to trade in a range of 10300 to 11500. A weekly close above the 11500 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: Except Infra all the 3 indices look range-bound in the short to medium term. On a longer term basis Infra is trading above its 40 week moving average. As mentioned previously - it would be prudent to add to positions once these indices close above the 40 week MA or have a positive crossover of a 10 and 40 week MA. Till then, they should be avoided.  

  

       

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 above its 40 week MA and the Small cap index looks setup for a break-out to the upside after a long period of consolidation. Any break below above the 5500 level on the small cap index would be bullish.