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.

Sector Technicals for the week ending – 12th April 2015

Nifty Weekly Technical Analysis:

The Nifty gained more than 2% for the week and moved comfortably past its resistance zones. The key point to note is that most of the indices saw strong price action for the week, especially the Mid and Small cap indices broke out to new all-time highs – Could that be a sign of a new all time high on the Nifty too?. On the derivatives side, FII’s have increased net longs in index futures and have added significantly to net longs in index call options. I mentioned last week to be long since my rule is to stay long above the 40 week moving average and that played out well. Looks like the index is heading to its next resistance zone near 9000. A lot of sectoral indices have shown strong gains during this week – This price action across the board and Nifty moving past its resistance zones with ease suggests a positive outlook over the next few weeks.

Sector Technicals:

CNX Midcap and Smallcap: The small and mid-cap indices broke out to new highs while their respective RS lines too performed well relative to the Nifty. I believe as long as both these indices trade above supports and perform well, it’s an overall positive for the Nifty too!. Both the Indices are in uncharted territory and there’s no way to tell where they will pause.  Momentum wise, both have 14 week RSI readings of below 70, so there is a possibility of seeing more momentum in these indices.

CNX Auto: The Auto space held up well, but its 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.

 

Bank Nifty: The banking index moved back above its support zone of 18200. However, the RS line has not performed well over the past few weeks signalling some underperformance of the banking space. As long as the RS line trades above its 40 week MA, banking could be an outperformer relative to the Nifty.

CNX Pharma: As mentioned before, the Pharma index looks to be the only bright spot amongst other indices. The MACD is in buy mode and RSI is overbought but the index could stay overbought for long periods as it did before. Price action wise, the index has closed well above 13000. Holding 13000 would be key to a sustained uptrend.

CNX FMCG: The FMCG index came back with a vengeance!. The RS line is holding supports while the index is just at its resistance. Still it would be better to wait and watch as other sectors are offering better outperformance opportunities.  

CNX IT: The IT index held its important support zone near 11900. The RS line too is showing signs of outperformance as its holding above its 40 week MA. The trend is positive for the IT space as long as it holds above 11900.

CNX Infra, Metal, Energy & Realty: All the 4 indices saw good price action after a long period of time. 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.

Sector Technicals for the week ending – 5th April 2015.

Nifty Weekly Technical Analysis:

The Nifty made up some of its losses in the last week and is placed around a lot of trendlines and in between supports as shown in the below chart. The MACD indicator is still in sell mode, while the 14 week RSI bounced back above 50. On the flows front, there was marginal net buying in index futures from FII’s – looks like a wait and watch approach. On the derivatives side, the India VIX is just at 13.67% - that seems like a very low level just before an RBI monetary policy meet !! – is the options market signalling continued strength in the market? Though we are still long as the Nifty is above the 40 week moving average, price action wise it STILL looks like we are in for some tough times ahead as we are in a confluence zone of supports and trendlines – The upside will look more convincing once these higher resistance zones are taken out. Also, the Index is above second major support zone of around 8150-8180.

Sector Technicals for the week ending – 29th March 2015

Nifty Weekly Technical Analysis:

The Nifty lost close to 3% last week and took out its 1^st major support zone and also closed the week below its trendline support, which held for almost a year. The MACD indicator is in sell mode, while the 14 week RSI has closed below 50 after spending a year above that level. On the flows front, we saw massive long unwinding by FII’s in index futures and have increased some longs in call options. Though my rules say to be long till we are above the 40 week moving average, price action wise it looks like we are in for some tough times ahead as we closed below supports and trendline support. Also, the Index is just above its 40 week MA and second major support zone of around 8150-8180 while the RSI just entered the sub 50 range after a long time. It would be interesting to see if the 8150 zone holds, other than that a prudent stop loss would be a close below the 40 week MA.   

Sector Technicals:

CNX Midcap and Smallcap: The small cap index is back below supports and looks likely to fall back into a broad trading range. The 40 week MA seems to be rolling over, which indicates a bit of range bound/ flattish returns ahead. The mid cap index too just closed above its important support zone, if this does not hold then the next important zone is around the 12000 mark.    

CNX Auto: As mentioned before, the Auto index seems to be losing leadership as it’s unable to move above its trend line and the 9000 zone is proving to be a stiff resistance. Also, a sell on the MACD along with a weakening MACD line and 14 week RSI doesn’t bode well for the medium term. The 8000-8100 zone looks like the next support zone for the index and it could be tested in the coming few weeks.

 

Bank Nifty: The banking index broke supports of 18200 and similar to the Nifty, the MACD is weakening and in sell mode while the RSI is also weak. The next important support zone could be near the 40 week MA and the September highs around the 16200 mark.

CNX Pharma: As mentioned before, the Pharma index looks to be the only bright spot amongst other indices. The MACD is in buy mode and RSI is overbought but the index could stay overbought for long periods as it did before. Price action wise it seems that the index is seeing some selling pressure at higher levels, as we have not been able to close and sustain above 13000 on the index.

CNX FMCG: The FMCG index is an avoid as it failed to hold its 40 week moving average, while on a relative basis the RS line looks likely to break is support. Better to wait and watch before taking any fresh longs here.   

CNX IT: The IT index closed at a important point, just above the crucial support of 11900. As long as the index trades above 11900 the medium term trend looks positive, but a close below that doesn’t bode well for IT stocks.

CNX Infra, Metal, Energy & Realty: The Infra, Energy, Metals and Realty space have massive overhead resistance and should be avoided. Their RS lines vs the Nifty are in all time low territory and look likely to stay low for the medium term.

    

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.

Sector Technicals for the week ending – 22nd March 2015.

Nifty Weekly Technical Analysis:

Back from the holidays and things aren’t looking good on the Nifty. The index closed a tad below its support zone of 8600 and the MACD and RSI indicators are showing massive negative divergences, while the MACD is already in the sell mode. However, the VIX is still just at 14% levels, suggesting no build-up of fear as per the options market. The VIX could be signalling a bounce back in the coming week. On the flows front, we saw some long unwinding but FII’s are still net long in index futures and have increased some longs in puts suggesting some hedging activities. Still sticking to a positive longer term outlook as the index is within its price channel. As the index is near the support zone of 8500-8600, it would be prudent to increase longs in a staggered manner. My stoploss is a close below the 40 week moving average.   

Sector Technicals:

CNX Midcap and Smallcap: It’s going to be a crucial week for the small cap’s as we closed just at supports. If the index closes below the 5550-5500 zone then small caps could fall back into the range-bound zone. The mid cap index is facing some resistance in the 13300 zone with medium term supports at 12650 and the MACD is in sell mode.   

CNX Auto: As mentioned before, the Auto index seems to be losing leadership as it’s unable to move above its trend line and the 9000 zone is proving to be a stiff resistance. Also, a sell on the MACD along with a weakening MACD line and 14 week RSI doesn’t bode well for the medium term. In relative terms, the RS line vs. the Nifty is back at the September-October levels signalling a loss of strength vs. the Nifty. The 8100-8200 zone looks like the next support zone for the index.

 

Bank Nifty: The banking index is fast approaching supports near 18200 and similar to the Nifty, the MACD is weakening and in sell mode while the RSI is also weak. Suggesting mediocre returns for the short term. However, a break below 18200 is serious trouble for the banking index.  

CNX Pharma: The Pharma index looks to be the only bright spot amongst other indices. The MACD is in buy mode and RSI is overbought but the index could stay overbought for long periods as it did before. Won’t be surprised if we see a monster rally in Pharma stocks in the coming few weeks.

CNX FMCG: The FMCG index took a beating last week and closed just at support of 20000 and a tad above its 40 week moving average. It would be interesting to see if the index can maintain its uptrend above the 40 week moving average, while on a relative basis the RS line looks likely to break support. Better to wait and watch before taking any fresh longs here.   

CNX IT: After Pharma, the IT index looks best positioned for the medium term. Both on a price as well as on a relative basis. The index is trading above supports with a positive MACD as well as a healthy RSI above 50.

CNX Infra, Metal, Energy & Realty: The Infra, Energy and Metals space have massive overhead resistance and should be avoided. Their RS lines vs the Nifty are in all time low territory and look likely to stay low for the medium term.

    

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.

Holiday :)

Hi, I will be on holiday for the next 2 weeks. Will update blog later :)