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

Nifty Weekly Technical Analysis:

The benchmark Nifty index gained more than 2% last week. The index is now back above the 40 week MA and the support zone around 8180 levels held quite well on a weekly closing basis. This zone was defended successfully over the last 3-4 weeks – maybe this is now a short to intermediate term bottom. The next logical resistance zone now seems to be in the 8600 zone as that’s where
the resistance and the upward sloping trendlines meet. The 14 period RSI has closed above 50 which is a good sign. The VIX, which was pretty sticky around 20% levels has cooled off to just below 17% while FII’s have turned net buyers in the index futures as well as call options space – Both suggesting a positive outlook.

Weekly charts :

Sector Technicals:

CNX Midcap and Smallcap: Both the indices closed the week between their support/resistance bands. However, since their RS lines are above the 40 week MA and even the indices are above that MA the overall picture looks positive at the moment.

CNX Auto: The Auto index RS line has finally broken out to new highs and the index too has bounced back well from its supports and 40 week MA’s. Expect the auto space to outperform in the coming few weeks.

 

Bank Nifty: The banking index has a lot of overhead resistance till the 18800-900 zones, would like to see those taken out which could mean further upside momentum. Still, from a risk-reward perspective the banking space looks pretty good as we are about 2.2% above the 40 week MA.

CNX Pharma: As mentioned before, the 13000 level holds the key for a sustained uptrend, better to reduce or wait to increase long exposure for some time till we get 2 weeks of continuous closing above the 13000 mark.

CNX FMCG: It was surprising to see that the FMCG index could not hold its 40 week MA !. Its not a pretty picture for the FMCG index as we are below the 40 week MA and just around support of 20000. Better to wait and watch.

CNX IT: The IT index gave a good move as it closed above its 40 week MA and also above the prior resistance of around 11500, both positive signs. A close above 12000 could mean further momentum and a dash to all time highs.

CNX Infra, Metal, Energy & Realty: All 4 indices are in exit mode as they are below their 40 week MA’s. Metals looked promising at first but then got beat down below supports. There could be a tradable bounce in the Energy space but for longer term better to wait for a move above the 40 week MA and a positive crossover of the 10 and 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.