Sector Technicals for the week ending – 31st May 2015.

Nifty Weekly Technical Analysis:

The benchmark Nifty index held up well last week thanks to a Friday surge. The index is still above the 40 week MA with a positive crossover of 10 and 40 week MA’s – so intermediate term trend remains positive. The next logical resistance zone now seems to be in the 8550-8600 area as that’s where the resistance and the upward sloping trend-lines meet. The 14 period RSI is holding above 50 and the MACD histogram has improved, both positive signs. The VIX also cooled off to 16.65% and FII’s are still net buyers in index futures (another positive).

Weekly charts :

Sector Technicals:

CNX Midcap and Smallcap: Both the indices closed the week right at their upper resistance bands. 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. Can expect a move past resistances this week – this could also mean that Nifty can take out its resistance too !

CNX Auto: The Auto index RS line is still above its 40 week MA and the Auto index is also sustaining above its 40 week MA. Expect the auto space to outperform the Nifty in the coming few weeks.

 

Bank Nifty: The banking index looks to be setting up for a run higher. It still has some overhead resistance till the 18800-900 zones, would like to see those taken out which could mean further upside momentum.

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

CNX FMCG: Still not a pretty picture for the FMCG index as it is below the 40 week MA and just around support of 20000. Better to wait and watch. Looks likely that this space is going to be range-bound for the near term.

CNX IT: Better to wait and watch the IT space as its right between supports and resistance and also its 40 week MA. A close above 12000 could mean further momentum and a dash to all time highs.

CNX Infra, Metal, Energy & Realty: out of the 4 indices Infra looks the best from the long side. 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. Expect Metals and Realty to underperform.  

 

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.