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Sunday, March 27, 2011

Stock Index Chart Patterns - BSE Sectoral Indices, Mar 25, '11

Last month, the chart patterns of the BSE Sectoral indices were trying to recover after varying degrees of correction. Are the corrections over, or is there more pain in the offing? Let us take a look.

BSE Auto Index

BSE Auto Index

The BSE Auto index has remained range bound within 8130 at the lower end and the 200 day EMA at the upper end. The bad news is that the long-term moving average is proving to be a tough hurdle. The good news is that the 50 day EMA is yet to fall below the 200 day EMA – keeping alive bullish hopes. The technical indicators are suggesting that the recent rally may break above the combined resistances from the 50 day and 200 day EMAs. The next hurdle on the up side will be the 9220 level. Hold.

BSE Bankex

BSE BANKEX

The BSE Bankex is looking more bullish than the Auto index - showing real signs of recovery. The chart formed a bullish ascending triangle pattern (flat top, higher bottoms), from which it has broken upwards (marked by the blue arrow). In the process, the index has moved above both the 50 day and 200 day EMAs. The technical indicators are all bullish. The rally is likely to continue, but watch out for a pullback down to the 12770 level. Buy the dips.

BSE Capital Goods Index

BSE Capital Goods Index

The woes of the BSE Capital Goods index continue as it languishes in a bear market. The recent rally has found resistance from the falling 50 day EMA. The only solace for the bulls is that the Feb ‘11 low of 12146 has not been breached, and the index has managed to move above the 13000 level. In spite of the bullish technical indicators, the bulls need to cover a lot of ground just to reach its falling 200 day EMA. With rising interest rates, this sector is really taking it on the chin. Avoid.

BSE Consumer Durables Index

BSE Consumer Durables Index

The BSE Consumer Durables index is back in bull territory after a steady rally. It seems to be forming a bullish rounding bottom pattern. All four technical indicators are looking bullish, but periodic corrections can be expected during the up move. Buy the dips.

BSE FMCG Index

BSE FMCG Index

The BSE FMCG index seems to have bottomed out, and is making another effort to climb above the 3500 level after several failed attempts earlier during the month. The index found support from the 200 day EMA during the recent corrective move, and is trading above both the 50 day and 200 day EMAs. The technical indicators are showing bullish signs. Buy the dips.

BSE Healthcare Index

BSE Healthcare Index

The BSE Healthcare index is facing resistance from its 200 day EMA, but there is a good possibility that it will be back in bullish territory soon. Resistances from the 50 day EMA and the 6060 level need to be crossed convincingly. The technical indicators are supporting the bullishness. Hold.

BSE IT Index

BSE IT Index

The BSE IT index bounced up smartly from the 200 day EMA, moved above the 50 day EMA and is facing a temporary resistance from the 6380 level. The bulls appear to be wresting control from the bears. Buy the dips.

BSE Metal Index

BSE Metal Index

The BSE Metals index finally succumbed to the ‘death cross’, and is technically in a bear market. The recent rally has found resistance from the falling 50 day EMA. The sector has suffered due to the poor growth in the capital goods and infrastructure sectors, and rising interest rates. Hold.

BSE Oil & Gas Index

BSE Oil & Gas Index

The BSE Oil & Gas index is in a bear market, though there are some signs of recovery. The recent rally found resistance from the 200 day EMA – keeping the bearish pattern of lower tops and lower bottoms intact. Avoid.

BSE Power Index

BSE Power Index

The BSE Power index remains deep inside bear territory. The recent rally was resisted by the falling 50 day EMA. The technical indicators are looking bullish, but reaching the falling 200 day EMA seems to be an uphill task. Avoid.

BSE Realty Index

BSE Realty Index

The BSE Realty index continues to bring up the rear. The technical indicators are suggesting a recovery, but I wouldn’t like to be a contrarian. A sector best avoided by small investors.

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