Consumer Goods Sector Sees Rotation

JC Parets
January 13, 2020

The Large-Cap indices continue to churn near the highs as Mid and Small-Cap stocks play catchup. Sector leadership remains clear, but we're now beginning to see signs that a former leader turned laggards may start heating up again.

Let's take a look.

Here's the Nifty Fast Moving Consumer Goods Index attempting to break back above 31,000 resistance as prices reverse from their lows and momentum diverges positively. If prices can break back above that resistance then this long-term uptrend could accelerate and target 39,000 over the course of 2020.

Click on chart to enlarge view.

Here's the Equally-Weighted Fast Moving Consumer Goods Index also reversing higher as momentum diverges. If the sector is going to accelerate higher, this would be a logical level for it to happen at.

The action we're seeing in the sector's individual components is what makes this thesis really compelling and is the more attractive way to express this thesis in the market.

Here's Tata Global break to new all-time highs. As long as prices are above 315 we're staying long with a target near 450.

Bata India Ltd. has held up well over the last few months and is now pressing up against all-time highs. We want to be buying a breakout above 1,800, with a target near 2,500.

Asian Paints Ltd. may need a few more days/weeks of consolidation, but any breakout above 1,835 should be bought with a target near 2,440.

Dabur India Ltd. holding support at 450 once again. As long as prices are above that then our target is 590. If you're more conservative you can wait for a break to new all-time highs and define your risk at the 2018 highs.

GlaxoSmithKline Consumer Products is a buy as it pulls back towards 8,100 support. Our upside target is above 10,000, so even at current levels the reward/risk favors being long.

Voltas Ltd. is confirming a failed breakdown by closing back above 675. As long as prices are above that level we can be long with an 800 target. It's also a positive to see momentum staying out of oversold territory during this breakdown.

Blue Star is attempting a breakout above 825 for the third time in the past few months. A decisive move above that level would get us long and target 1,015.

Parag Milk Foods is the setup for those that prefer mean reversion trades to breakouts. As long as prices are above 132, this failed breakdown and bullish momentum divergence setup is intact and targets 195-200.

If the market is going to make new highs, we need to see participation broaden. The price and momentum improvements in these Consumer Goods names may be the start of just that and offer attractive reward/risk entries to play this thesis.

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

Allstarcharts Team

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