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Sunday, May 13, 2012

Which sectors are dragging the Sensex down?

The previous update to the technical analysis of BSE Sectoral index charts was posted shortly after the intermediate rally in the Sensex topped out in Feb ‘12. A few sectors were beginning to look bullish, while the others were still struggling to get out of bear markets.

The Sensex has reverted to a bear market since then. Most of the sectors are looking bearish, but there are a few exceptions.

BSE Auto Index

BSE Auto Index

BSE Auto index is technically in a bull market, as it is trading above its rising 200 day EMA. The index almost reached its Nov ‘10 top, but combined negative divergences from all four technical indicators has pulled it down to the support-resistance level of 9630. The index is looking oversold, so an upward bounce from the current level or the 200 day EMA can be expected. The bounce may provide an exit opportunity.

BSE Bankex

BSE BANKEX

The chart pattern of BSE Bankex is almost identical to that of the Sensex – so it can’t be blamed for dragging the Sensex down. Private sector banks have performed better than PSU banks – which is no great surprise.

BSE Capital Goods Index

BSE Capital Goods Index

BSE Capital Goods index is one of the Sensex-draggers. It failed to move above the blue down trend line since touching its Nov ‘10 top. A test, and possible breach, of the Dec ‘11 low is likely. The sector performed the worst in the Mar ‘12 IIP index.

BSE Consumer Durables Index

BSE Consumer Durables Index

BSE Consumer Durables index is technically in a bull market, as it is trading above its rising 200 day EMA. However, it is struggling to climb above the blue down trend line. A brief breach in Feb ‘12 found resistance from the 7000 level – its previous top in Sep ‘11. The technical indicators are neutral. A couple of stocks from the sector have been star performers.

BSE FMCG Index

BSE FMCG Index

Hola! What do we have here?! A sectoral index in a raging bull market! After a brief drop below the 200 day EMA (in Feb ‘11) following a triple-top reversal pattern, the index has been on a steady one-way ride. The chart pattern of the BSE FMCG index is the best example of why every small investor should own a couple of FMCG stocks.

BSE Healthcare Index

BSE Healthcare Index

Close behind the FMCG index is BSE Healthcare index, which is trading well above its rising 200 day EMA in a bull market. The index is correcting after touching its previous top of Jan ‘11. The dip can be used to enter/accumulate.

BSE IT Index

BSE IT Index

The ‘Infy effect’ caused BSE IT index to gap down below the blue down trend line in Apr ‘12. The recovery could not fill the gap entirely as the down trend line provided strong resistance. Some more down side can be expected.

BSE Metal Index

BSE Metal Index

BSE Metal index has been a major drag on the Sensex, as it continues to touch lower tops and lower bottoms in a bear market. A test of the Dec ‘11 low is likely.

BSE Oil & Gas Index

BSE Oil & Gas Index

Despite a breach of the down trend line in Feb ‘12, BSE Oil & Gas index is sliding relentlessly and is testing its Dec ‘11 low. Technical indicators are suggesting that a new low is in the offing.

BSE Power Index

BSE Power Index

BSE Power index is demonstrating a lot of downward power. Poor government policies and slow execution of projects is turning the sector sick – just like BSE Oil & Gas index. A test and breach of the Dec ‘11 low looks a certainty.

BSE Realty Index

BSE Realty Index

The less said about BSE Realty index the better. Everything that is wrong with the econo-political situation in India can be found in this sector – corruption, politician-underworld nexus, defrauding the public and the exchequer, money laundering, flouting of all laws with impunity, total lack of transparency.

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