In early 2018, the NIFTY marked its lifetime 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 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 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 that 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 underperformed the NIFTY and currently appear to be in negative divergence.
Additionally, Index like NIFTY Junior (NIFTY Next 50) along with MIDCAP and Commodities space has also reversed their primary uptrend. Pharma, on the other hand, remains under broad corrective decline since the 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.
This was first published by The Economic Times.
Milan Vaishnav, CMT, MSTA
Consulting Technical Analyst
Member: (CMT Association, USA | CSTA, Canada | STA, UK) | (Research Analyst, SEBI Reg. No. INH000003341)
