As illustrated in our long only-short only perspective, buying Indian banks would have brought serious gains in the past few weeks (SBI up 24 per cent, ICICI Bank 16 per cent, NSEBANK 16 per cent and HDFC – 10 per cent). The important question to ask here is whether this positive minor trend is still ongoing, or the top is near.
NSEBANK is at high rankings. This means that, on an intermediate basis, NSEBANK has outperformed the most and this positive performance might turn soon, triggering an underperformance of the Indian banking stocks in the next few weeks.
We illustrated here our minor and intermediate view on the index. The larger view sees the current structure as a completing intermediate (Z) leg up, which is heading towards key resistances at the psychological 12,000 level. The daily view also suggests 12,000 as an important Fibonacci confluence level. RSI (relative strength index) momentum over 70 resistances and its non-confirmation also suggest an exhausting upmove.
Therefore, our overall view on banks is up, but topping, with a potential intermediate reversal near the mentioned resistance. The performance cycle (an extension of the relative ranking in an oscillator form) is topping but it is still positive, suggesting that 12,000 might happen before anything.
The Numeric Ranking suggests Tata Steel, Idea and Bharti as the best stocks to sell and ITC, Hero Honda and Reliance Infrastructure as the best stocks to buy. On the sector side, Consumer Durables is still at the top (best sector to sell), followed by BSEBANK, BSEAUTO and NIFTY. The Volatility Index remains at the bottom, preceded by BSEOIL and Healthcare.
Our overall view on the Indian market remains up, but topping. Nifty reached our anticipated resistances at 5,600-5,650 levels. Above respective resistances, we are looking at a potential extension till 5,700-5,800 levels at most. The structure looks topping and both weekly and daily RSI suggest an exhaustion soon.
The Volatility index made a new minor low (14.35 levels), but the overall structure and the bottoming performance cycle suggest a turn from here and a rise in volatility ahead. The Indian rupee moves in a corrective triangle structure, which should complete near key supports at 46 levels. Above 47, our triangle scenario is confirmed. Our long only-short only tracker carries four new buy signals on ACC, CNXIT, DLF and Infosys. The Numeric Ranking filter suggests Infosys as the best buy and Reliance as the best sell. The top winner is SBI, as mentioned prior, with 24 per cent gains, followed by NSEBANK and ICICI Bank. The positive signal on the respective winners is still running.
The author is employed with Orpheus CAPITALS, a global alternative research firm
