[Premium] Is The Fun Just Beginning In Nifty Media?

First, let's take a look at the Nifty Media vs Nifty 500 ratio which has seen downside momentum slow significantly and prices are now beginning to turn higher. While they're not at a logical level that we'd expect prices to reverse from, we do have the early January lows to use as a point of reference for now on the long side.

Click on chart to enlarge view.

Meanwhile, on an absolute basis, the Nifty Media Index has spent the last 7 months basing near former support/resistance and is attempting a breakout. While It's not confirmed yet and we'd wait for a decisive move above 2,000 to confirm this trend reversal fully, the action is constructive.

If this situation looks very similar to that of the Nifty Pharma Index last November, that's because it is. The same conditions around relative performance and momentum are playing out here, however, given our near-term market outlook, it may take a bit of time for this to play out. The important part is that prices do not break their recent lows. If we're above them then a neutral/bullish perspective looks prudent.

In the meantime, the best way to play this improvement in the sector is remains its individual components.

Here's Inox Leisure Ltd., which we've liked for several weeks following its breakout above 385, now meeting our upside objective at 503. Some consolidation is likely in the near-term, however, after it digests these gains we'd be buyers of a move back above 505 with a long-term target near 695.

Another leader has been PVR Ltd. which met out upside target and has been slowly grinding higher since. Given the current environment and its bearish momentum divergence, some backing and filling would be completely normal here. From a structural perspective, we want the stock to stay above 1,830, but tactically there's no reason to be long if the stock breaks back below 2,020. For now, the bias is higher towards 2,610, but a move below 2,020 would suggest to us that there's too much downside risk/opportunity cost if you're a short-term market participant.

Meanwhile, if you're looking for a laggard to play catch up then TV Today Network presents a very interesting opportunity.

On the weekly chart, we see the stock testing support at 233 for the fourth time since mid-2017 as momentum diverges positively. From a long-term perpsective this is a very logical level for prices to find their footing and begin working higher, especially as downside momentum wanes.

Here's the daily chart that shows the stock's recent failed breakdown below 233 that could help spark its move higher. As long as prices are above 233 then we can err on the long side and see how this potential bottom develops. If it builds on itself then there's potential for the stock to more than double over the coming quarters and years, ultimately heading back towards its all-time highs of 550.

The Nifty Media sector appears to be turning a corner from a relative strength and momentum perspective. We've participated in some of the strongest trends like Inox Leisure and PVR Ltd. and will continue to do so until we get confirmation that the rest of its components are ready to move higher as well. We're slowly but surely getting there in our opinion.

Keep eye on this sector in the coming weeks and months. Big things potentially ahead, especially if it withstands the corrective action taking place in the broader equity indices.

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

Allstarcharts Team