Special Note: Study of NIFTY against Sectors and Broader Indices - What helps NIFTY and what drags it

Special Note: Study of NIFTY against Sectors and Broader Indices - What helps NIFTY and what drags it

In early 2018, the NIFTY marked its life-time high levels of 11171.55 and since then it has remained under consolidation for the rest of the time of this year. After marking this level, the NIFTY created a lower top for itself in the 10800-10850 zone and continued to resist to the falling trend line which emerged from 11171 and subsequently joined the lower top.

What was important was that despite such formation, NIFTY continued to remain in an upward rising channel which began in from early 2016. This Channel remains intact Though it has tried to break above this falling trend line pattern resistance, it is yet to make any meaningful move.

 

At this juncture, it would be interesting to have a look at Sectors and Broader Market Indices which have either risen in sync with NIFTY and have remained resilient while keeping their primary uptrend intact and the ones which have evidently broken their uptrend and are in their intermediate corrective trend.

Broader Markets have remained in news because of their volatility and under performance in recent times. Even though they remain in the Weakening Quadrant of the Relative Rotation Graph since last couple of weeks, they have kept their primary trend intact and have not shown any structural breach if we examine the Weekly Charts above. It is evident that broader market indices like CNX100, CNX200 and CNX 500 has kept their primary up moves intact and have not breached their trend line support along with the ENERGY pack.

Even sector indices like NIFTY Financial Services, FMCG, NIFTY Bank have kept their primary up moves intact and have not breached their major trend line supports with IT Pack sharply out-performing the general Markets.

 

However, there are some pockets in the Markets which have reversed their primary uptrends and are presently in their intermediate (secondary) corrective trend.

 

It is evident from the above chart that Sectors like METALS, INFRA, MEDIA and AUTO have breached its 2-yr old upward rising channel and have reversed their primary uptrend. They presently remain in the intermediate (Secondary) corrective trend. They have grossly under performed the NIFTY and currently appear to be in negative divergence.

Commodities space has also reversed its primary uptrend. Pharma, on the other hand remains under broad corrective decline since year 2015.

In the coming days, it would be extremely important for the Broader Indices to remain above its critical supports, Markets in general will need improvement in the important pockets like AUTO, METALS, MEDIA, PHARMA, INFRASTRUCTURE and Commodities space for itself to gather strength for a meaningful up move.

 

Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst

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