Run up to Budget February 26, 2016

Sectoral Overview

Nifty 2

Nifty Bank 2

Nifty Auto 3

Nifty FMCG 3

Nifty IT 4

Nifty Infra 4

Nifty Metal 5

Nifty Pharma 5

BSE Telecom 6

BSE Oil & Gas 6

Run up to Budget

2

NIFTY (CMP: 7029.75)

Rationale:

Due to recent sharp correction, the Niftyprecisely tested its April 2014 high of 6869and then managed to give a decentbounce of more than four percent in ashort span.

Now, in the near term, first 6960.65 holdsa key support as the ‘Higher Top HigherBottom’ formation on hourly chart remainsintact as long as Nifty stays beyond thislevel. Next major support can be seen at6869.

On the flipside, if Nifty has to strengthen abit then it should first break and sustainabove 7252.40, which is the ’20 EMA’ levelon the daily chart.

At this juncture, we do not expect significantfall in the market and thus, traders areadvised not to short at current level.

Daily Chart

Source: Falcon

NIFTY Bank (CMP: 13791.45)

Rationale:

The index completed an ‘Impulsive’upmove in Jan 2015 and since then, hasbeen forming ‘Lower Tops Lower Bottoms’.

In May 2014, the index gave a breakoutfrom the resistance zone of 13300 – 13415which were highs registered in 2010 and2013, respectively. Resistances brokenpreviously could now act as a support.

Also, 61.8% retracement of the entire‘Impulsive’ upmove from 9367 to 20908 isplaced around 13150.

Hence, although, the broader trend isdown, in near term the index could show apullback move from the support range of13150 – 13415. The near term resistanceis around 14440 and index could give apullback move upto the mentionedresistance.

Daily Chart

Source: Falcon

Run up to Budget

3

NIFTY Auto (CMP: 7164.85)

Rationale:

Recently, the ‘Auto’ index violated the lowerend of the falling channel; but, managed toregain the position above the 7000 markon a weekly closing basis.

The weekly chart depicts a ‘Bullish Harami’pattern at the lower end of the channel,which coincides with the ‘Super Trend’indicator as well as 50% Fibonacciretracement level of the previous large upmove on the monthly chart.

On the smaller degree (daily) chart, themomentum oscillator and the ‘ParabolicSAR’ are positively poised; indicating aprobable bounce towards 7750 – 7800 inthe near term.

It’s advisable to trade with a positive biasas long as important support levels of 7147remain intact on a closing basis.

Weekly Chart

Source: Falcon

NIFTY FMCG (CMP: 18306.60)

Rationale:

Along with the broader market, the NiftyFMCG index too has been correcting sincelast one year.

On daily charts, the ‘RSI’ indicator isshowing ‘Positive Divergence’ with itsprices. This could lead to a short termpullback up move in near term.

However, as the prices are forming ‘LowerTops Lower Bottoms’ on medium timeframe charts, the upmove could just be anopportunity to exit from longs.

The near term resistances for the index areseen around 18700 and 19000, whereassupport is placed around 17770.

Daily Chart

Source: Falcon

Positive Divergence

Run up to Budget

4

NIFTY IT (CMP: 10463.35)

Rationale:

The golden era of IT sector seemed to haveended last year as the Index startedforming ‘Lower Highs Lower Lows’ and hadconfirmed a ‘Triangle’ breakdown onweekly chart.

Recently, the Index managed to reboundafter taking a support at the 61.80%retracement level of the entire up movefrom 8609.95 to 12908.10.

From last two weeks, the breakdown levelsof ‘Triangle’ pattern are acting as a crucialhurdle for the index.

The index may remain within a broaderrange of 10150 – 10900 in the near termand eventually, it may breach the range onthe down side.

Weekly Chart

Source: Falcon

NIFTY Infra (CMP: 2305.55)

Rationale:

The index has been a major underperformer from last six months and hasbeen forming ‘Lower High Lower Lows’ onweekly chart.

Currently, the index rebounded from a‘Trend line’ support, which coincides withthe 78.60% retracement levels of entire upmove from 1829.80 to 3524.05.

Index has formed a ‘Bullish Hammer’pattern on daily chart around thementioned support zone.

Considering the positive placement ofmomentum oscillator in both daily andweekly chart, we may see a bounce back inthe index towards 2460 – 2480 levels inupcoming sessions.

Weekly Chart

Source: Falcon

Run up to Budget

5

NIFTY Metal (CMP: 1629.55)

Rationale:

The index has been forming ‘Lower Topsand Lower Bottoms’ since June 2014 and isin a strong Bear grip since then.

In last couple of months, the index hasbeen consolidating in a range; but, yet toshow a reversal sign.

The ‘SuperTrend’ indicator and ‘89EMA’ ondaily charts indicate a strong resistancearound 1700 – 1725 in the near term.

Traders are advised not to pre-empt anymoves and should rather closely observeabove mentioned key levels. Until then wemay continuation of the ongoingconsolidation phase.

Daily Chart

Source: Falcon

NIFTY Pharma (CMP: 11164.25)

Rationale:

Technically speaking, the index is nowhovering around the weekly ’89 EMA’placed at 11100 since last couple ofmonths.

Momentum indicators are deeply oversold;thus, can lead to some recovery. On thedaily chart, the immediate hurdle is at11700. If the index manages to surpassthis resistance on a sustainable basis, thenwe may expect further move towards12100.

However, short term traders should lightenup their longs once the index is able toapproach the 12100 mark.

On the downside, 10810 would now be amake or break level for the index.

Daily Chart

Source: Falcon

 

12100

Run up to Budget

6

BSE Telecom (CMP: 1206.12)

Rationale:

The entire ‘Telecom’ space has undergonea lot of stress in last few months. However,its constituents are trading around theirimportant as well as crucial support levelsand thus, downside seems limited fromcurrent levels.

Due to lack of historical data, we areunable to analyze ‘BSE Telecom’ indexthoroughly. However, we can still mentionfew key levels to watch out for in the nearterm.

We can observe a strong resistance zonearound 1260 – 1280 on daily chart. Asustainable move beyond this strong hurdlemay lead to a decent upward rally towards1340 – 1360.

On the flipside, 1157 has become a majorsupport level for the index.

Daily Chart

Source: Falcon

BSE Oil & Gas (CMP: 8339.38)

Rationale:

Similar to most of the sectoral indices, the‘Oil & Gas’ index to had undergone astrong price wise correction in the recentpast. At present, it’s trading marginallybelow the monthly ’89-EMA’ level of 8790,which is a sign of weakness.

With a broader view, this index is oscillatingin a wide range of 10000 to 7400 and isnow approaching its lower end.

However, having said that, it’s notadvisable to trade aggressively on the shortside considering a probable ‘Positivedivergence’ in weekly ‘RSI-Smoothened’oscillator.

A near term support and resistance levelsare placed at 8000 and 8600, respectively.

Daily Chart

Source: Falcon

Run up to Budget

7

Technical Research Team Tel: 022 – 4000 3600 (Extn. 6552/ 6554/ 6844) Website: www.angelbroking.com

Email: techno-edge@angelbroking.com

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