Sector Technicals for the week ending – 29th March 2015

Nifty Weekly Technical Analysis:

The Nifty lost close to 3% last week and took out its 1^st major support zone and also closed the week below its trendline support, which held for almost a year. The MACD indicator is in sell mode, while the 14 week RSI has closed below 50 after spending a year above that level. On the flows front, we saw massive long unwinding by FII’s in index futures and have increased some longs in call options. Though my rules say to be long till we are above the 40 week moving average, price action wise it looks like we are in for some tough times ahead as we closed below supports and trendline support. Also, the Index is just above its 40 week MA and second major support zone of around 8150-8180 while the RSI just entered the sub 50 range after a long time. It would be interesting to see if the 8150 zone holds, other than that a prudent stop loss would be a close below the 40 week MA.   

Sector Technicals:

CNX Midcap and Smallcap: The small cap index is back below supports and looks likely to fall back into a broad trading range. The 40 week MA seems to be rolling over, which indicates a bit of range bound/ flattish returns ahead. The mid cap index too just closed above its important support zone, if this does not hold then the next important zone is around the 12000 mark.    

CNX Auto: As mentioned before, the Auto index seems to be losing leadership as it’s unable to move above its trend line and the 9000 zone is proving to be a stiff resistance. Also, a sell on the MACD along with a weakening MACD line and 14 week RSI doesn’t bode well for the medium term. The 8000-8100 zone looks like the next support zone for the index and it could be tested in the coming few weeks.

 

Bank Nifty: The banking index broke supports of 18200 and similar to the Nifty, the MACD is weakening and in sell mode while the RSI is also weak. The next important support zone could be near the 40 week MA and the September highs around the 16200 mark.

CNX Pharma: As mentioned before, the Pharma index looks to be the only bright spot amongst other indices. The MACD is in buy mode and RSI is overbought but the index could stay overbought for long periods as it did before. Price action wise it seems that the index is seeing some selling pressure at higher levels, as we have not been able to close and sustain above 13000 on the index.

CNX FMCG: The FMCG index is an avoid as it failed to hold its 40 week moving average, while on a relative basis the RS line looks likely to break is support. Better to wait and watch before taking any fresh longs here.   

CNX IT: The IT index closed at a important point, just above the crucial support of 11900. As long as the index trades above 11900 the medium term trend looks positive, but a close below that doesn’t bode well for IT stocks.

CNX Infra, Metal, Energy & Realty: The Infra, Energy, Metals and Realty space have massive overhead resistance and should be avoided. Their RS lines vs the Nifty are in all time low territory and look likely to stay low for the medium term.

    

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 more information on relative strength please click on the Relative Strength section above.

Sector Technicals for the week ending – 22nd March 2015.

Nifty Weekly Technical Analysis:

Back from the holidays and things aren’t looking good on the Nifty. The index closed a tad below its support zone of 8600 and the MACD and RSI indicators are showing massive negative divergences, while the MACD is already in the sell mode. However, the VIX is still just at 14% levels, suggesting no build-up of fear as per the options market. The VIX could be signalling a bounce back in the coming week. On the flows front, we saw some long unwinding but FII’s are still net long in index futures and have increased some longs in puts suggesting some hedging activities. Still sticking to a positive longer term outlook as the index is within its price channel. As the index is near the support zone of 8500-8600, it would be prudent to increase longs in a staggered manner. My stoploss is a close below the 40 week moving average.   

Sector Technicals:

CNX Midcap and Smallcap: It’s going to be a crucial week for the small cap’s as we closed just at supports. If the index closes below the 5550-5500 zone then small caps could fall back into the range-bound zone. The mid cap index is facing some resistance in the 13300 zone with medium term supports at 12650 and the MACD is in sell mode.   

CNX Auto: As mentioned before, the Auto index seems to be losing leadership as it’s unable to move above its trend line and the 9000 zone is proving to be a stiff resistance. Also, a sell on the MACD along with a weakening MACD line and 14 week RSI doesn’t bode well for the medium term. In relative terms, the RS line vs. the Nifty is back at the September-October levels signalling a loss of strength vs. the Nifty. The 8100-8200 zone looks like the next support zone for the index.

 

Bank Nifty: The banking index is fast approaching supports near 18200 and similar to the Nifty, the MACD is weakening and in sell mode while the RSI is also weak. Suggesting mediocre returns for the short term. However, a break below 18200 is serious trouble for the banking index.  

CNX Pharma: The Pharma index looks to be the only bright spot amongst other indices. The MACD is in buy mode and RSI is overbought but the index could stay overbought for long periods as it did before. Won’t be surprised if we see a monster rally in Pharma stocks in the coming few weeks.

CNX FMCG: The FMCG index took a beating last week and closed just at support of 20000 and a tad above its 40 week moving average. It would be interesting to see if the index can maintain its uptrend above the 40 week moving average, while on a relative basis the RS line looks likely to break support. Better to wait and watch before taking any fresh longs here.   

CNX IT: After Pharma, the IT index looks best positioned for the medium term. Both on a price as well as on a relative basis. The index is trading above supports with a positive MACD as well as a healthy RSI above 50.

CNX Infra, Metal, Energy & Realty: The Infra, Energy and Metals space have massive overhead resistance and should be avoided. Their RS lines vs the Nifty are in all time low territory and look likely to stay low for the medium term.

    

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 more information on relative strength please click on the Relative Strength section above.

Holiday :)

Hi, I will be on holiday for the next 2 weeks. Will update blog later :) 

Sector Technicals for the week ending – 1st March 2015.

Nifty Weekly Technical Analysis:

The Nifty index closed at 8900 in the budget session and now faces massive overhead resistance in the 8900-9000 zones, though the MACD is in the buy mode and we are seeing a higher histogram number, which is supportive. The Small cap index has broken out to new highs – that could support a breakout on the Nifty too. On the flows front, FII’s are still net long in index futures and have reduced short positions in Index futures. Hence, the longer term outlook still remains positive as the index is within its price channel. As the index is back near life time highs and resistance, fresh allocation should be made if we get 1 or 2 days of successful closings above 9000. That would signify a more positive bias and momentum shift.  

Sector Technicals:

CNX Midcap and Smallcap: The small cap’s managed to breakout after a 10 month trading range, if it manages to stay above the previous resistance zone, we could see a bigger rally in small cap stocks. Also, the RS line of small cap’s is poised to close above its 40 week MA which is supportive. The mid cap index is facing some resistance in the 13300 zone and the MACD is not indicating much. If the small cap’s follow through with the break out then Mid cap’s also have a high probability of breaking out to new highs.   

CNX Auto: The Auto index seems to be losing leadership as it’s unable to move above its trend line and the 9000 zone is proving to be a resitance. Also, a sell on the MACD along with a weakening MACD line and 14 week RSI doesn’t bode well for the medium term. In relative terms, the RS line vs. the Nifty is back at the September-October levels signalling a loss of strength vs. the Nifty.

 

Bank Nifty: The banking index still looks positive. However, the RS line shows that the Banking index is losing leadership vs. the Nifty. As long as the RS line trades above the 2013 highs banks should be the outperformers.  

CNX Pharma: The Pharma index is holding key support of 11000 and the MACD is also strengthening. In relative terms the RS line seems to be testing the previous highs. A breakout on the RS line would suggest a rotation into defensives and can put the Pharma space back in the leadership position.

CNX FMCG: The FMCG index took a beating last week, mostly due to the higher weightage to the ITC stock. In relative terms, the RS line is back below its 40 week MA and seems to be back at supports. If the index manages to close above prior resistance of 21300 levels then that would be a positive.

CNX IT: As mentioned before, the IT space looks positive post its breakout at 11800-900 zones. With a strengthening MACD and RSI the medium term still looks positive for this space. The RS line is indicating that IT will continue its outperformance vs. the Nifty.

CNX Infra, Metal, Energy & Realty: The Infra, Energy and Metals space have massive overhead resistance and their RS lines are in all time low territory. However, the Realty space still looks positive as its above crucial supports and its RS line seems to be putting in a relative bottom vs. the Nifty.

    

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 more information on relative strength please click on the Relative Strength section above.