Sector Technicals for the week ending – 24th April 2015.

Nifty Weekly Technical Analysis:

The Nifty closed below its first crucial support zone of 8550-8600 and for the medium term the trend seems to be negative as long as we trade below this zone. On a longer term basis, the 8150-8200 zone remains a major support. If that breaks then the longer term uptrend would become suspect and we also closed just 11 points below the 40 week moving average – so there seems to be a lot confluence of price support plus moving average support in the 8150-8200 zone, that is why I think these are important levels for the longer term trend. On the flows front, the India VIX closed around the 19% zone which is very alarming. Also, FII’s have reduced net longs in the index futures space and are 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, both the indices closed below their 1^st support zones just like the Nifty and are now at their 2^nd support areas. A break below these supports and a close below 40 week moving average would be trouble for the longer term.

CNX Auto: As mentioned before, 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 index showed some strength for a day or two but its chart is also very similar to the Nifty in terms of closing near supports and 40 week moving average. The next 2-3 weeks are going to decide the longer term trend for banking stocks. RSI has closed below 50 after a very long time..watchout.

CNX Pharma: The Pharma index took a beating last week and as mentioned before, the 13000 level holds the key for a sustained uptrend, 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 took out its second support zone last week and closed below its 40 week moving average. I would be a buyer only above the 40 week moving average..but hey that’s just me !

CNX Infra, Metal, Energy & Realty: Energy and Realty still have quite some overhead resistance, Infra looks best of the lot while the Metals space just closed 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 only Infra is trading above its 40 week MA’s but has moved back below resistance – nothing seems to be going well for these 4 indices.

 

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.