In Charts: What Technicals Are Saying About Indian Markets

“The global cues were positive on the back of better-than-expected private sector jobs data and rising hopes for additional stimulus package. On the domestic front, positive global cues, another phase of ‘unlock’ and a host of positive macro data lifted the sentiments,” Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services Ltd., said. “Decent auto sales numbers for September also provided support to the market.”

The S&P BSE Sensex and the Nifty 50 index rallied 3.5% and 3.3% respectively for the week. The broader markets too performed in tandem with the benchmark indices as Nifty Midcap and Smallcap indexes advanced 3.8% and 3.7%. All sectoral indices ended the week higher.

“11,460 and 11,450 would be major hurdles for the Nifty 50 index, however, the outcome from the Supreme Court on the interest waiver would decide the broader trend for the market. Index would find supports at 11300 and 11250 levels,” said Shrikant Chouhan, executive vice president of equity technical research at Kotak Securities

With the headline indices expected to be volatile ahead of key upcoming events, technical analysts remain focused on specific stocks and sectors going into the next week.

ACC Ltd., Ambuja Cements Ltd., InterGlobe Aviation Ltd. and Siemens Ltd. are expected to relatively outperform the Nifty 500 index. “Ambuja cement has taken a U-turn and entered the leading quadrant directly from the weakening quadrant,” said Milan Vaishnav, CMT, MSTA, technical analyst and founder of Gemstone Equity Research. “Siemens and ACC remain placed in the improving quadrant and on the other hand, Interglobe Aviation is seen entering the leading quadrant.”

On the other hand, Marico Ltd., ICICI Prudential Life Insurance Ltd., United Spirits Ltd. and Indian Oil Corp. could show relative underperformance against the broader markets. “Marico has moved into the lagging quadrant where it’s joined by ICICI Prudential, Indian Oil and United Spirits which continues to languish lower” he said.

Financials Set For A Comeback?

Banking and financial service stocks have been the biggest laggards in the recovery that started from March. While most sectors are above or near their highest levels for 2020, the Nifty Financial services index continues to trade 25% lower so far this year. After showing signs of recovery, the index snapped its three-month gaining streak to end nearly 7% lower in September.

However, price action in the last week indicates that index could outperform going forward, according to Vaishnav. “The index has broken out from a falling channel and has formed a gap which indicates greater push to the upside.”

Additionally, the relative strength index has marked a fresh 14-period high and formed a bullish divergence against the price which is a positive indication. “The index when benchmarked against the broader markets is showing relative strength and has entered the improving quadrant on the daily RRG charts,” said Vaishnav.