Weekly Market, Sectoral and Stock Perspective- Technicals - 14 Dec 2013

8/13/2019 Weekly Market, Sectoral and Stock Perspective- Technicals - 14 Dec 2013

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Weekly Market, Secto ral and Stock Perspective Technicals Dec 14, 2013

Markets fail to sustainAfter two weeks of gains, markets failed to move higher this week. Although the main indices touched a new life highon Monday, selling soon resumed and dragged the Sensex/Nifty lower for the rest of the week. While the Sensex lost1.34% W-o-W, the Nifty shed 1.46% over the same period.

Technical state of the marketIndicator Used/Pattern observed Comments

Market Strength Volumes, Market breadth

W-o-W volumes were lower on the BSE/NSE.This is encouraging for the bulls as it indicatesthat the selling seen this week was not intense.

Reflecting the negative sentiments, marketbreadth was negative in all the five tradingsessions of the week.

Nifty is likely to break the 6149 short term trend

reversal levels next week

Nifty Daily chart


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Technical state of the market.contd.

Indicator Used/Pattern observed Comments

Trendiness ADX, Moving Averages, Parabolic SAR

The weakness seen this week led to the main indicesclosing below the 13-day SMA, implying a weakeningof the short-term uptrend.

They nevertheless continue to trade above the 50-day SMA and 200-day EMA.

The daily ADX readings remain in decline modeindicating that the market is not currently in anystrong trend.

Volatility20 day Bollinger Band, Average True

Range (ATR)

The Sensex/Nifty have closed below the mid-band ofthe 20-day Bollinger Band, which is a negative signalfor the short term.

On the weekly charts, the Sensex/Nifty have reactedfrom the upper band of the 20-week Bollinger Bandand are now headed towards its mid band.

The ATR readings on the weekly charts have testedtheir previous lows and bounced this week. Thisindicates that volatility could rise in the near term.

Momentum 14 Day RSI, MACD, Stochastics

Reflecting the weakness seen in the last fewsessions, the 14-day RSI has dipped lower and cut its9-day EMA from above.

The 14-week and 14-month RSI too have eased inthe last one week, indicating a loss in momentum.

The daily MACD indicator has flattened this weekafter rising in the last few weeks.

Outlook

With the markets sliding sharply after touching a new lifetime high and also closing below a gap, it seems the bears are having anupper hand. The Sensex/Nifty have also made an engulfing bear pattern on the weekly charts. This is considered a bearish patternby technical analysts.

A look at the weekly line chart on the next page also suggests that the Nifty may have made a lower top and could thereforedecline more from current levels.

While the short term trend continues to remain up, the coming week will be crucial as traders will need to see if the Nifty can holdabove the recent swing lows of 20673/6149. A close below these levels would confirm a reversal of the current short-term uptrendand lead to further declines.

Considering the weak signals given by the short term moving averages, bollinger bands and momentum readings, there is a goodpossibility of the short-term uptrend reversing. Furthermore, most of the sectoral indices too are showing weak signals for the shortterm.

A close below 20673/6149 would lead to a testing of the intermediate trend reversal levels of 20137/5972.

A larger correction towards the next major intermediate supports of 19264/5700 is likely once the levels of 20137/5972 are broken.We believe this correction, when it occurs would provide intermediate and long term investors with a good entry level into themarkets.


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Here are the key levels to watch for the coming week;

Trading Strategy: With the markets in correction mode, traders should remain on the sidelines till we see signs ofsustainable strength emerging.

Action Points Sensex Nifty Action

Current Close 20716 6168

Immediate Resistances 21166-21207 6301-6343

Immediate Supports 20673-20137 6149-5972Close below 20137/5972 wouldreverse intermediate uptrend.

Further Downsides 20052-19264 5825-570019264/5700 is next majorintermediate supports.

Further Upside Targets 21322-21484 6357-6415 New Lifetime highs

Sectoral studies

IndicesLastclose

W-o-W %Chg

ST/ IT/ LT trend Stocks likely to outperform

CNX IT 8957.6 1.5 ST, IT & LT Up

CNX FMCG 16623.0 0.7 ST & IT Down, LT Up HUL, ITC could fall further

CNX Metal 2398.8 -1.2 ST & IT Up, LT Down Tata Steel could outperform

CNX Pharma 7276.9 -1.2 ST & IT Down, LT Up

CNX Nifty 6168.4 -1.5 ST, IT & LT Up

CNX 500 4756.1 -1.5 ST Down, IT & LT Up

CNX Realty 172.5 -1.6 ST, IT & LT Down DLF could fall further

CNX Auto 5180.2 -1.8 ST Down, IT & LT Up Bajaj Auto could fall further

CNX Mid Cap 7605.0 -2.1 ST Down, IT Up, LT Down

CNX Junior Nifty 12158.3 -2.3 ST Down, IT Up, LT Down

CNX Energy 7745.1 -2.3 ST Down, IT Up, LT Down HPCL, BPCL could fall further

CNX Small Cap 3161.2 -2.7 ST Down, IT Up, LT Down

CNX Bank 11366.9 -3.0 ST & IT Up, LT Down ICICI Bank could fall further

CNX Infra 2405.9 -4.5 ST Down, IT Up, LT Down

CNX PSU Bank 2461.8 -5.4 ST Down, IT Up, LT Down

ST = Short Term, IT = Intermediate Term, LT = Long Term

Nifty Weekly Chart


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CNX IT Index Daily Chart

CNX IT continues to trade in a range with a positive bias. The ADX readings are beginning to rise suggesting that the trend isstrengthening and implying a break out of this range soon.

CNX Auto Index Daily Chart

CNX Auto fell below its previous swing lows this week, suggesting a reversal of the short-term uptrend. The index is trading belowthe 13-day SMA and momentum readings are in decline mode.


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CNX Bankex Daily Chart

CNX Bankex index could test its recent swing lows of 11107 in the coming week. These are crucial levels as they correspond to theshort-term trend reversal levels of the index. The index currently trades below the 13-day SMA and short-term momentum readingslike the 14-day RSI are in decline mode.

CNX Junior Nifty Index Daily chart

CNX Junior Nifty index has entered into a short-term downtrend as it has broken its previous swing lows this week. Technicalindicators too are showing weak signals.


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Analyst: Subash Gangadharan([email protected])

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

Disclaimer:This document has been prepared by HDFC Securities Limited and is meant for sole use by the recipient and not for circulation. Thisdocument is not to be reported or copied or made available to others. It should not be considered to be taken as an offer to sell or a solicitation to

buy any security. The information contained herein is from sources believed reliable. We do not represent that it is accurate or complete and itshould not be relied upon as such. We may have from time to time positions or options on, and buy and sell securities referred to herein. We mayfrom time to time solicit from, or perform investment banking, or other services for, any company mentioned in this document. This report is intended

for non-Institutional Clients

Stock Pick Short NTPC

NTPC has been making lower tops and lower bottoms for the last few weeks. The stock has broken the important

`140.25 supports in the process.

The breakdown was accompanied with huge volumes, which indicates that selling was intense.

The stock resumed its downtrend on Friday after witnessing a pullback on Wednesday-Thursday.

Technical indicators are giving negative signals as NTPC trades below the 13-day and 50-day SMA.

Momentum readings like the 14-day and 14-week RSI are in decline mode and trade below their respective movingaverages, which does not augur well for the stock in the short and intermediate term.

The weekly and monthly technical set ups too are not looking very encouraging as this weeks fall has led to a big redcandle forming on the weekly charts.

We recommend a positional sell and our entry levels are between `137-139. Stop loss is at `142, while downside targets

are at `127. CMP is `137.3. Holding period is 1-2 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 thesame 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.

Daily chart

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Weekly Market, Sectoral and Stock Perspective- Technicals - 14 Dec 2013