Sector Technicals for the week ending – 21st June 2015.

Nifty Weekly Technical Analysis:

The Nifty gained 3% last week and managed to close the week above its resistance line. However, on a longer term basis I am still a negative for the moment as we are below the 40 week MA, the index will have to clear 8500 – which is the preceding highs of May. The MACD is still in sell mode and below its 0 line and the 14 week RSI is below 50 (not been a good combination in the past). Hence, for a longer term move higher would like to see prices sustain above 8500 and some improvement in MACD and RSI indicators. On the derivatives side, FII’s are net short in index futures. The only comforting sign is that the VIX has declined to around 15% from near 20% levels – so the options market is pricing in less volatility ahead for the near term.

Weekly charts :

Sector Technicals:

CNX Midcap and Smallcap: Technically both indices might see some more selling pressure/ moderate returns due to the combination of a sell trigger on the MACD and RSI below 50. Small caps look more vulnerable at this point for a sell off as they are below their 40 week MA. Would be prudent to increase longs only above the resistance bands and if we get a weekly buy trigger from the MACD.

CNX Auto: MACD = sell, RSI <50, Auto index < its 40 week moving average – these 3 are not pointing out to a positive outlook for the coming few weeks despite the bounce back from supports. Better to take longs only if we can sustain a few weeks above this support and see some improvement on the MACD and RSI indicators.

 

Bank Nifty: Banking index did not participate much in last weeks rally, technically the picture is same as the Auto index as per the indicators. Price action wise we are just at supports, so yes there can be a bounce back for a day or 2 but on a weekly timeframe things look negative/moderate returns. 

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. RSI is below 50 after a long time and once we lose support things would get ugly.

CNX FMCG: Still not a pretty picture for the FMCG index as it is below the 40 week MA. The index lost support of 20000. Better to wait and watch. Looks likely that this space is going to be range-bound for the near term. Longer term the picture looks negative as the MACD line is negative and also in sell mode along with a RSI <50. This combination is a serious negative.

CNX IT: The IT space also did not participate much in the rally last week, gaining only 1% odd. Short term supports seem to be in at 10900 – which has held well over last few weeks. Longer term, would like to see the index move above its 40 week MA and also see an improvement in RSI and MACD before taking longs.

CNX Infra, Metal, Energy & Realty: As mentioned last week Infra looked the best from the long side but still better to wait or use less exposure. Better to wait for the Energy space to clear overhead resistance 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.