The document provides a technical analysis of the banking and IT sectors in India for the week of August 22, 2015.
It summarizes that:
- The banking sector showed weakness and is expected to decline further in the coming week, though a minor short-term rise is possible. Support levels are around 17,560.
- The IT sector trend remains positive, and after a small dip to support around 11,785 levels, it is expected to rise sharply in the coming weeks with upside potential to 12,670.
- Long positions in IT stocks and short positions in banking stocks are recommended on any price movements.
The document provides a technical analysis of the banking and IT sectors in India for the week of August 22, 2015.
It summarizes that:
- The banking sector showed weakness and is expected to decline further in the coming week, though a minor short-term rise is possible. Support levels are around 17,560.
- The IT sector trend remains positive, and after a small dip to support around 11,785 levels, it is expected to rise sharply in the coming weeks with upside potential to 12,670.
- Long positions in IT stocks and short positions in banking stocks are recommended on any price movements.
The document provides a technical analysis of the banking and IT sectors in India for the week of August 22, 2015.
It summarizes that:
- The banking sector showed weakness and is expected to decline further in the coming week, though a minor short-term rise is possible. Support levels are around 17,560.
- The IT sector trend remains positive, and after a small dip to support around 11,785 levels, it is expected to rise sharply in the coming weeks with upside potential to 12,670.
- Long positions in IT stocks and short positions in banking stocks are recommended on any price movements.
The document provides a technical analysis of the banking and IT sectors in India for the week of August 22, 2015.
It summarizes that:
- The banking sector showed weakness and is expected to decline further in the coming week, though a minor short-term rise is possible. Support levels are around 17,560.
- The IT sector trend remains positive, and after a small dip to support around 11,785 levels, it is expected to rise sharply in the coming weeks with upside potential to 12,670.
- Long positions in IT stocks and short positions in banking stocks are recommended on any price movements.
A periodical technical report on Banking & IT sectors
August 22, 2015
Nagaraj S. Shetti nagarajs.shetti@hdfcsec.com Tel-022-30750021
RETAIL RESEARCH
Sector Technical Watch August 22, 2015
NSE Bank (Bank Nifty): Minor upmove is likely during early part of next week, but the sector is not expected to sustain the upward bounce and could show further weakness.
NSE Banking daily timeframe
NSE Banking weekly timeframe
RETAIL RESEARCH
Sector Technical Watch August 22, 2015
Current Observation:
Daily Timeframe: After showing sideways consolidation movements during early part of this week, the banking sector (Bank Nifty) witnessed sharp decline towards the end of this week.
The sector opened on Friday with downside gap and slipped into further weakness, but managed to close with minor recovery attempt. The opening downside gap remains partially filled.
Currently we observe a sector movement in the downward channel pattern (pink parallel down sloping trend lines) and the sector placed around the lower end of channel in last session. We observe multiple support currently, which are lower end of triangle and also 200day EMA (blue curvy line) around 17950-18000 levels.
Among sector participants, major components like SBIN. ICICI Bank, Axis Bank, HDFC Bank, Kotak Bank, Canara Bank, BOI are all showing recovery from near the support or from the lower levels. Yes Bank and IndusInd Bank are still showing weak pattern.
Weekly timeframe: The banking sector was not able to sustain on the smart recovery of last week, as it slipped again sharply this week and closed near the days low.
The Bollinger band has turned into squeeze pattern (narrowing of upper and lower band) and currently the sector closed below the support of mid band. As per the theory of Bollinger bands, the underlying moving below the support of mid band, has a possibility of reaching down to the lower band, which is currently placed around 17560 levels.
Currently the banking sector is nearing the cluster support of lower Bollinger band and also trend line support as per the concept of change in polarity (green dotted down trend line) around 17560 levels.
Weekly momentum oscillator like 14 period RSI has been moving within a band of 60-40 levels, which is indicating the larger sideways range for the sector over the last many weeks.
Summing Up:
The underlying trend of Banking sector as per smaller and larger timeframe is weak and more weakness could be in store for next week.
However, there is a possibility of minor upside bounce back in banking sector during early part next week, but the upside recovery attempt could be short lived and next lower levels to be watched for coming week is around 17560 levels.
One may look to create short positions in banking major, mid-cap banking and PSU banking stocks on any upward rise from here.
RETAIL RESEARCH
Sector Technical Watch August 22, 2015
CNX IT: The uptrend remains intact and the sector is likely to move up further after showing minor dips down to the immediate supports by next week.
CNX IT daily timeframe
CNX IT weekly timeframe
RETAIL RESEARCH
Sector Technical Watch August 22, 2015
Current Observation:
Daily timeframe: After showing a fine upmove during early part of this week the IT sector witnessed sharp decline and volatility during later part of week.
We observe upmove in IT sector in the positive sequence of higher tops and bottoms and up sloping trend line has continued to offer support for the sector on dips.
This week saw the sector rested on the multiple support of ascending trend line (brown line) and horizontal line (green line connecting previous highs, as per the concept of change in polarity) around 11840-50 levels.
Daily RSI has placed around the key upper area of 60 levels and is making attempt to turn up from there. As long as daily RSI holds round 60 and moves up from there, it is presumed sharp upmove for the underlying IT sector.
Major sector participants like Infosys, TCS, Wipro, Tech Mahindra, Mind Tree, OFSS, Cyient, HCL Tech are all in a uptrend and currently they are showing upward bounce after the minor correction.
Weekly Timeframe: The IT sector as per larger timeframe chart showed an excellent upside breakout of significant horizontal band pattern at 11785 levels (green dashed parallel horizontal lines) during last week and this week saw consolidation after the sharp upmove.
A long legged doji or high wave type candlestick pattern has been formed this week and the sector is still sustaining the upside breakout of the pattern. This suggest a minor halt in uptrend after the sharp upmove and it suggests a buy on dips attitude around the support of upper horizontal band.
If any dips sustains above the upper horizontal band around 11785-11800 levels for next week, then that price action could open up the potential upside pattern target up to 12670 levels (orange horizontal line), which could be achieved in the next 3-4 weeks.
Weekly trend strength indicator like 13 period ADX has reached the key lower levels of 15 and turned up. Historically, the ADX moving above 12-15 levels coincided with the sharp trended move in the sector on either side.
Summing Up:
The daily and weekly trend of IT sector is still positive, after showing a minor dips down to the support by next week, the IT sector is expected to move up sharply. Hence, the immediate support is placed around 11785 levels and next upside levels to be watched is around 12350 for next week.
One may look to create long positions in IT large and mid-cap participants on minor dips from here, for a reasonable upside levels for the next 1-2 weeks.
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