[Premium] Chartbook Update Highlights

First let's start off with the Nifty 50. The large-cap index hit all-time highs again last week and remains the cleanest of the major indexes from a risk management perspective. There's a slight bearish momentum divergence, but besides that if we're above 10,530, the next stop remains 12.820.

The Nifty Next 50, while better looking than the mid and small-cap indexes, is right near a flat 200-day moving average which suggests a neutral approach is best until we get a decisive breakout or breakdown from the last 6-month's range.

Mid-caps are further off their highs but in a similar spot, right near their flat 200-day moving average and momentum failing to hit overbought conditions during this rally. This suggests a neutral approach is best until prices are decisively back below 19,020 where being bearish makes sense.

Small-caps bounced as well, but are still well below a downward sloping 200-day moving average. Of the indexes we cover, this is the only one where a bearish approach is appropriate at current levels.

Nifty Financial Services Index, not surprisingly because of its place as the largest component of the market, looks like the Nifty 50. It made new highs last week, but developed a slight momentum divergence as well.

The Nifty Fast Moving Consumer Goods also hit a new all-time high and is consolidating nicely above our price target of 30,710.

The Nifty IT Index continues to consolidate and stair step its way toward our price target of 15,150.

With these three sectors of the market (and Energy) making new highs on a regularly, there's no justification for being bearish on the broader market.

The Nifty Pharma Index gave back some of its gains last week, but continues to consolidate as it attempts to carve out a long-term bottom. There continues to be opportunity in this space on the long side if we're patient and wait for individual names to set up.

Even the weakest sectors have bounced after meeting our tactical downside price targets two weeks ago. With that said, these areas of the market, like the Nifty Commodities Index, are areas we want to be selling on strength until their downtrends are halted.

The Nifty Metals Index is another one we want to be fading as it retests former support at 3,555 with a price target of 3,050.

The Nifty Infrastructure is the weakest of the sectors, barely staging a counter-trend rally these last two weeks and beginning to roll over again. If prices are below 3,160 we want to be short and taking profits at 2,795.

In the Commodities space, Guar Seed is finally breaking out. As long as prices are above 4,315 we can be long with a price target of 5,175.

Cotton also confirmed its breakout with a second weekly close at all-time highs. If prices are above 23,750 we want to be long with an upside objective of 29,815

Mentha Oil also retested support and broke out once again. We want to be buying weakness here as long as prices are above 1,485 with a price objective of 1,995.

Zinc on the other hand is one we want to be fading on strength as long as prices are below 190, with a downside target of 154.50.

USDINR finally made a new all-time daily closing high this past week as the US Dollar broke out against many developed currencies like the Euro, as well as Emerging Market currencies like the Rupee. This is what we were looking for on the long side to get involved, and we think this is likely the start of a new intermediate-term uptrend in the pair.

GBP/INR on the other hand broke down from its consolidation to nearly 7-month lows. Of all the currency pairs we track, this is the least attractive one on the long side.

The Bottom Line: As you can tell from our notes, the themes that we saw in our last update pretty much continued over the last two weeks, with a few additions in the Commodities and Currencies, as well as updates to our short theses in the weakest areas of the market like mid and small-cap stocks; Public Sector Banks; and Metals and Infrastructure stocks. When it comes to the indexes on an absolute basis, we continue to favor the Nifty 50 on the long side and the Nifty Free Float 100 Smallcap Index on the short side, whereas the others a neutral approach is best.

For a more comprehensive update you can view all of the Chartbooks with refreshed risk management levels and price objectives, which also includes nearly 200 individual equities across the large, mid, and small-cap space.

Thanks for reading and let us know if you have any questions.

Allstarcharts Team