INSUBCONTINENT EXCLUSIVE:
In early 2018, the Nifty marked its lifetime high of 11,171 and from there it went into a long consolidation for the next six months
After marking this level, the index created a lower top for itself in the 10,800-10,850 zone and continued to face resistance in the falling
trend line that emerges from 11,171 and joins the lower top.
What was important was that despite such formation, the Nifty50 remained in an
upward rising channel, which began from early 2016
This channel still remains intact
Though it has tried to break the pattern resistance from this falling trend line, it is yet to make any meaningful move.
At this juncture,
it would be interesting to look at the sectors and the broader market indices which have risen in sync with the Nifty50 and remained
resilient while keeping their primary uptrend intact, and also the ones which have evidently broken their uptrend and are in an intermediate
corrective trend.
The broader markets have been in news because of their volatility and underperformance in recent times
Even though they are in the weakening quadrant of the Relative Rotation Graph since last few weeks, they have kept their primary trend
intact and have not shown any structural breach on the weekly charts
It is evident that the broader market indices such as CNX100, CNX200 and CNX 500 along with the energy pack have kept their primary upward
trends intact and have not breached their trend line support.
Even sectoral indices like Nifty Financial Services, FMCG and Nifty Bank have
kept their primary upward trends intact and have not breached their major trend line supports
The IT pack has sharply outperformed the broader market.
However, there are some pockets in the markets which have reversed their primary
upward trends and are currently in their intermediate (secondary) corrective trend.
It is evident from the above charts that sectoral
indices representing Metals, Infrastructure, Media and Auto have breached its two-year-old upward rising channels and reversed their primary
uptrends.
They currently remain in the intermediate (secondary) corrective trend and have grossly underperformed the Nifty
They currently appear to be in a negative divergence.
Additionally, indices such as Nifty Junior (NIFTY Next 50) along with Midcap and
commodities have also reversed their primary uptrend
Pharma, on the other hand, remains in a broad corrective decline since 2015.
In the coming days, it would be extremely important for the
broader market indices to remain above their critical support levels, while the market in general will need an improvement in important
pockets such as auto, metals, media, pharma, infrastructure and commodities in order to be able to gather strength for a meaningful upward
move.
(Milan Vaishnav, CMT, MSTA is Consultant Technical Analyst at Gemstone Equity Research Advisory Services, Vadodara
He can be reached at milan.vaishnav@equityresearch.asia)
