In Charts: What Technicals Are Saying About Indian Markets

Indian equity markets ended a rangebound week with modest gains as investors prefer to remain on the sidelines on account of weak global cues.

“Global markets were range-bound as investors were cautious with less than two weeks to go before the U.S. presidential election and awaited a breakthrough in U.S. stimulus talks,” Siddhartha Khemka, head of retail research at Motilal Oswal Financial Services Ltd., said. “Surging coronavirus cases in the U.S. and Europe also raised concerns in the market.”

The S&P BSE Sensex and the Nifty 50 index gained 1.8% and 1.4%, respectively, during the week. The broader market outperformed the benchmark indices with the Nifty Midcap and Nifty Smallcap advancing 3.1% and 2.7% each. Most sectoral indices ended higher last week barring those related to information technology and pharmaceuticals.

“Overall, the uptrend of the markets remains intact, however we continue to witness Nifty meeting with resistance around the 12000-12050 zone. Once this is taken out, it can head higher towards its all-time high of 12,430 made in January 2020. On the downside, support is seen around 11600-11650 zone,” said Aamar Deo Singh, head-advisory at Angel Broking Ltd. “India VIX continues to trade at comfortable levels at 21.82, reflecting the overall positive sentiments. However, one needs to be cautious at the current levels as well, ahead of the upcoming US Presidential elections.”

With the headline indices expected to trade within a narrow range, technical analysts remain focused on specific stocks and sectors going into the next week.

ACC Ltd., Dabur Ltd., Kotak Mahindra Bank Ltd. and Pidilite Industries Ltd. could relatively outperform the Nifty 500 index. “Dabur has seen a sharp improvement in its relative momentum and is likely to move into the improving quadrant indicating an end to its underperformance against the broader markets,” said Milan Vaishnav, CMT, MSTA, technical analyst and founder of Gemstone Equity Research. “Kotak Mahindra Bank, ACC and Pidilite are rotating positively and are seen moving higher while maintaining their relative momentum.”

On the other hand, Marico Ltd., SBI Life Insurance Ltd., Sun Pharmaceuticals Ltd. and Punjab National Bank could show relative underperformance against the broader markets. “PNB has rotated negatively and moved back into the lagging quadrant. Marico, SBI and Sun Pharma are seen moving lower and languishing in the lagging quadrant upon showing no signs of improvement in their relative momentum.” Milan added.

More Steam To The Bitcoin Rally

The world’s largest cryptocurrency has rallied more than 20% in October to hit its highest level since July 2019. Bitcoin surged past the $13,000-mark on Wednesday for the first time in more than 14 months after the announcement by PayPal to let its customers use cryptocurrencies. Technical analysts, however, suggest further upside based on key chart formations and indicators.

“As per the Ichimoku studies, the crypto is again above cloud on weekly charts (which is a bullish indication). Another important component of Ichimoku studies, called Chikou span, is free from obstruction which means a swift and strong upmove can be seen in bitcoin,” said Gaurav Bissa, AVP, LKP Securities. A breakout from its bullish cup and handle formation strengthens the case for further upside in the crypto, according to Bissa, as he expects bitcoin to retest the levels of $15,500-$19,500 in the upcoming quarters.