Sector Technicals for the week ending – 19th April 2015.

Nifty Weekly Technical Analysis:

The Nifty closed in the crucial support zone of 8550-8600. For the medium term the trend seems to be positive as long as we trade above the 8550-8600 zones. Although there could be a lot of back and forth around this zone. One will have to be quick to get in and out of positions. On a longer term basis, the 8150-8200 zone remains a major support. If that breaks then the longer term uptrend would become suspect. On the flows front, the India VIX closed around the 15% zones which is not alarming. Also, we have not seen any build-up of short positions by FII’s in the index derivatives space. However, they seem to be well hedged via long positions in index put options.  

Sector Technicals:

CNX Midcap and Smallcap: The small and mid-cap indices respective RS lines performed well relative to the Nifty suggesting continued outperformance. However, the Mid-cap index is just at supports for a positive short to medium term outlook it would be imperative that the Mid-caps hold the 13200-13300 zone.

CNX Auto: The Auto index’s first hurdle is going to be clearing the 9000 levels. Relative to the Nifty, it looks difficult to outperform as the RS line is not making new highs and seems to be reverting to its 40 week moving average. 8000 is going to be an important medium/long term support for the Auto index.

 

Bank Nifty: The banking is near important levels both on the price as well as relative charts. Price wise, the important support zones for the banking index are in the 17700 to 18000 zone which also is the current 40 week moving average!. While relative to the Nifty, the RS line is just near its 40 week MA and around its prior highs of Apr’13. Price action over the next few weeks would be important to see in the banking space as that could possibly be an indication for the Nifty too.  

CNX Pharma: The Pharma index took a beating last week and as mentioned before, the 13000 level holds the key for a sustained uptrend and the index closed below that. Expect some back and forth around the 13000 mark for the coming weeks, OR better to reduce long exposure for some time till we get 2 weeks of continuous closing above the 13000 mark.

CNX FMCG: The RS line for the FMCG index is holding supports while the index is just at its resistance. Still it would be better to wait and watch before adding to longs. 

CNX IT: The IT index closed a tad bit below its 1^st support zone near 11900 while the next support zone lies at around 11500. Price action over the next few weeks would be important to watch before increasing longs. Sometimes it is just better to do nothing, let the price action be a guide.  

CNX Infra, Metal, Energy & Realty: Interesting price action in the 4 indices over the last week. While Energy and Realty still have quite some overhead resistance, Infra looks best of the lot while the Metals space just close above an important resistance and seems to be breaking out of a downtrend. However, it’s best to be long only once they are above their 40 week moving average. Currently Infra and Realty are trading above their 40 week MA’s.

    

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.