[Premium] May Monthly Charts

June 5, 2019

In this post, we're going to outline the most significant charts/updates since April's post.

First let's start with the Nifty 50 relative to the Nifty Free Float Smallcap 100 that continue to diverge from one another...one making new all-time closing highs and the other sitting just off 52-week lows. We need to see Small-Caps start to participate for this rally in Large-Caps and the broader market to gain steam.

Click on chart to enlarge view.

Financial Services continue to be one of the strongest areas of the market, which is a big positive and one that keeps us constructive on stocks as an asset class. If the sector that makes up a third of the market-cap weighting is trending higher, it's hard to be bearish.

One of the strongest, and largest names in the index is Housing Development Finance Co., which broke out above 2,000, targeting 2,620.

Public Sector Banks are a small weighting in the broader market, but their largest component State Bank of India has finally broken out of a multi-year base. As long as prices are above 325 then this uptrend is intact and targets 435 initially.

IT remains constructive but unable to hold its gains and sustain new highs. Further rotation into this sector would be a big positive for stocks.

Reliance Industries Ltd. continues to consolidate within its long-term uptrend, stuck below 1,400. As long as we're below that, neutral is best, but we fully expect this to eventually resolve higher.

Larsen & Toubro is leading the charge in Infrastructure stocks, finally breaking out to new all-time highs. As long as prices are above 1,430, the bias is higher toward 2,160.

While the Nifty Commodities and Infrastructure Index continue to improve, Nifty Metals remain weak. While prices can stabilize above 2,840, below that they become vulnerable to a larger decline that we want to be avoiding.

Nifty Pharma remains weak and an area we want to be avoiding on the long side until we start to see prices stabilize.

Zee Entertainment remains heavy and is weighing on the Media sector as a whole. If prices break back below 355, they look vulnerable to retest their 2018 lows and potentially support near 260.

Base Metals remain weak, with Copper opening at the highs of the month and closing at the lows. There remains little reason to be long this space from any sort of structural perspective.

Zinc was the strongest Base Metal, but was rejected at its highs in April and saw downside follow-through in May. Neutral is best until we see new all-time closing highs to confirm a new uptrend trend has begun.

Lastly, Crude Oil saw massive downside follow-through in May after being rejected at 4,660 in April. Prices continue to look vulnerable, so neutral is best as long as this 3,000-4,660 range remains intact.