Monthly Market, Sectoral And Stock Perspective Technicals
June 29, 2013
Nifty Daily Chart
Markets slide lower
The month of June 2013 saw the main indices in decline mode for a major part of the month. A strong pullback rally
in the last week of June helped to curb the losses and gave some hope to the bulls. The Sensex/Nifty finally ended
with M-o-M losses of 1.84/2.4%.
Technical state of the market
Indicator Used/Pattern observed
Market Strength
Volumes, Market breadth
Comments
M-o-M volumes were lower on both the
BSE/NSE. This is encouraging news for the bulls
as it indicates that the markets fell this month
with lower volumes. On the weekly charts, we
also notice that the pullback rally seen in the
last week of June was accompanied with higher
volumes compared to the previous few weeks
when the markets slide lower.
Market breadth mirrored the price action in the
markets. Was positive during upmoves and
negative during down moves.
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Technical state of the market.contd.
Indicator Used/Pattern observed
Trendiness
ADX, Moving Averages
Comments
Reflecting the recent strength seen in the
markets in the last one week, the Sensex/Nifty
trade above the 13-day SMA. They also
managed to cross the 200-day EMA in the last
week of June 2013.
However, the Sensex/Nifty continue to trade
below the 13-week simple moving averages,
indicating that the intermediate trend is yet to
strengthen.
Both the Sensex/Nifty trade above the 13month SMA, which is a healthy signal for the
markets long term uptrend.
The Daily ADX readings are in range bound
mode, indicating that the markets are probably
not trending strongly in any particular direction.
Volatility
20 day Bollinger Band, Average True
Range (ATR)
The Sensex/Nifty have closed above the midband of the 20-day Bollinger Band, which
indicates some more short-term strength is
likely for these main indices.
On the weekly charts too, the Sensex/Nifty have
closed above the mid-band of the 20-week
Bollinger Bands, which is a positive signal.
Reflecting the strength seen in the last week of
June 2013, the 14-day RSI has jumped smartly
and cut its 9-day EMA in the process.
Momentum
14 Day RSI, MACD, Stochastics
The 14-week RSI too has climbed in the last
one week after being in decline mode. The
indicator however remains below its 9-week
EMA. This implies that while short term strength
was seen in the markets, the intermediate
strength is yet to pick up.
The 14-month RSI is in sideways mode
reflecting the range bound price action seen on
the monthly charts of the Sensex/Nifty.
Outlook
Last weeks rally has reversed the Sensexs short term downtrend by moving above the previous swing highs of
19384. The Nifty is however yet to reverse its downtrend. If the Nifty does follow its brother by moving above 5863
and also holds above the immediate upper gap area of 19093/5749, then the markets could be headed higher in the
coming weeks. Sectors that could support the markets upmove are IT, Oil and Gas, Healthcare, Capital goods,
Banking and Auto.
On the other hand, if any further upmoves fail to sustain and the gap area of 19093-18925/5749-5699 is filled, then
the markets could once again resume their short term downtrend and head towards the previous intermediate lows of
18173-18144/5500-5477.
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On a long-term perspective, the markets remain in an uptrend and continue to consolidate between the 18144-20444/5477-6230
levels. We expect the Sensex to make new lifetime highs once this consolidation phase is over. Unless, of course it breaks down
from its current narrow trading range.
So just to summarize, the markets remain in a long term uptrend. And for the short term uptrend to sustain it is important that the
Sensex/Nifty move up further and do not fill the gap area of 19093-18925/5749-5699.
Here are the key levels to watch for the coming month;
Trading Strategy: With the markets short-term uptrend gaining strength, traders can adopt a selective buying approach
with strict stop losses to control risk. Traders must however be alert for any signals of tiredness in the upmove and a
resumption of the short-term downtrend that could take the Sensex/Nifty towards their previous intermediate lows of 1817318144/5500-5477.
Action Points
Sensex
Nifty
Action
Current Close
19396
5842
Immediate Resistances
19586-19712
5863-5973
Immediate Supports
19093-18467
5749-5566
Further Downsides
18173-18144
5500-5477
Further Upside Targets
19860-20444
6011-6229
Close above would reverse
current short-term downtrend
and possibly lead to further
upsides.
18144/5477 are Intermediate
trend reversal levels
Previous intermediate highs of
the Sensex/Nifty
Stock Pick Buy Infy
Infy Daily Chart
After touching a low of 2,186 in early May 2013, Infy has been consistently moving higher and making higher tops and
higher bottoms. This week saw the stock moving above its recent resistances of 2,460 on higher than average volumes.
Technical indicators are giving positive signals as Infy trades above the 13-day and 50-day SMA. Short-term momentum
readings like the 14-day RSI, which were range bound, have broken out of this range, which is a positive signal. They
have also cut their 9-day EMA from below in the process.
Infy also has the support of the BSE IT index, which is currently one of the technically strongest sectors in the market. We
recommend a positional buy and our entry levels are between `2480-2500. Stop loss is at `2330, while upside targets are
at `2850. CMP is `2498.85. Holding period is 3-5 weeks.
Note: Once the market opens for trade, the analyst will review it and decide to give the call through an internal mail/SMS at the
same or different levels of entry, target and stop loss or not give the call at all. Clients could get in touch with the analyst through
their designated dealers to check about this.
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Sectoral studies
Indices
Last
close
M-o-M %
Chg
ST/ IT/ LT trend
BSE IT
6255.10
3.13
ST, IT & LT up
BSE Oil/Gas
8900.41
2.84
ST, IT & LT up
BSE Healthcare
8845.26
-0.02
ST, IT & LT up
BSE Sensex
19395.81
-1.84
ST, IT & LT up
BSE Capital Goods
9111.38
-3.15
BSE 500
7164.06
-3.73
BSE Auto
10715.77
-4.04
BSE FMCG
6458.09
-4.64
BSE Small Cap
BSE Mid Cap
5643.52
5964.50
-5.05
-6.65
BSE Banks
13257.76
-7.04
BSE Power
1622.55
-7.55
BSE Metal
7753.76
-8.81
BSE Realty
1511.02
-10.32
BSE Cons Durab
6134.72
-20.28
Comments
Stocks likely to
outperform
Uptrend to accelerate
once index crosses
6319. Out
Infy, TCS
performance looks set
to continue.
Rallied from strong
intermediate supports.
Could consolidate in ONGC, Reliance
the short term before
continuing uptrend.
Bounced strongly from
8426 levels. Out
performance looks set
to continue.
Bounced strongly after
making a double
ST, IT Up & LT Down
bottom around the
8671 levels.
Bounced strongly after
making a double
ST Down, IT & LT up
bottom around the
6868 levels.
Bounced after making
a double bottom
around the 10293
ST, IT & LT Down
levels. Above 13-day
SMA and momentum
picking up.
Making lower tops on
daily chart.
ST Down, IT & LT up
Could underperform in
near term.
ST, IT & LT Down
ST, IT & LT Down
Has recently bounced
smartly and now
trades above 13-day ICICI Bank could
ST & IT Down, LT Up
SMA. Momentum
rise further
rising from oversold
levels.
Fresh ST Uptrend
ST, IT & LT Down
above 1668.
Fresh ST Uptrend
Tata Steel could
ST, IT & LT Down
above 8123.
outperform
Could head towards
ST, IT & LT Down
2012 lows
ST, IT & LT Down
ST = Short Term, IT = Intermediate Term, LT = Long Term, OB = Overbought, RSC = Relative Strength Comparative, STR =
Short Term Reversal Level, SMA = Simple Moving Average
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BSE IT Index Weekly Chart
Made a double bottom and now rising.
Can continue to outperform due to
rising Relative Strength Comparative
BSE Small Cap Index Monthly chart
Continues to make lower tops
and lower bottoms
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Analyst: Subash Gangadharan (subash.gangadharan@hdfcsec.com)
HDFC Securities Limited, I Think Techno Campus, Building B, Alpha, Office Floor 8, Near Kanjurmarg Station, Opp. Crompton Greaves,
Kanjurmarg (East), Mumbai 400 042 Fax: (022) 3075 3435
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buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and it
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