The Sensex and the Nifty dipped below their intermediate downtrend targets on two days but closed well above these targets indicating that the intermediate uptrend which had started on the July 13 is still intact. The CNX Mid Cap index did close below its intermediate downtrend target of 5,719.30 and is in an intermediate downtrend. This index will now have to close past the earlier minor top of 6,098.35 to re-instate the intermediate uptrend.
The new targets for the Sensex and the Nifty to drop into a fresh intermediate downtrend are at 14,701 and 4,359.40 respectively. The gap made on Thursday between 15,043 and 15,207 will now act as a support to any decline in the coming week. The Nifty does not exhibit any gaps and the gap by the Nifty futures between 4,351 and 4,516 will act as a support.
Most of the indices ended in green as the sensex gained 1.66% and the Nifty ended 2.20% higher. Among the sectors, the BSE Realty sector was the largest gainer ending 7.78% higher and was followed by the BSE Metals index which gained 4.77% higher. On the negative side, the BSE FMCG sector was the lone loser ending 0.07% lower. This was mainly due to the lower monsoon.
The daily MACD indicator for the indices has already dropped below its trigger line and this suggests that either the intermediate trend of the indices is down or it is sideways. On the upper side, the sensex has a resistance at 15,760 and 15,950 before it heads towards the earlier minor top of 16,002. The Nifty has a resistance at 4,400 and 4,720 and will have to close past these resistances before the indices can move higher to test its earlier minor top of 4,731.45. Currently few stocks are in a trending mode and the possibility of the indices remaining in a range of 14,800-16,000 for the sensex and 4,400 and 4,750 are quite high.
In the past two to three weeks we have been seeing a bearish volume action on most of the trading days. On up days, the trading volumes have been lower and on down days, the trading volumes are higher. This will have to improve if the sensex and the Nifty were to cross their July highs and make it to the 17,000 and 5,000 level respectively.
As suggested above, few stocks are in a trending mode and I will take a look at some of the stocks in the Oil and Gas sector which are trending higher and are in an intermediate uptrend. As these stocks move in line with the oil prices, I will not recommend a buy for investors. These stocks can be picked up by position and swing traders and they must stay in these stocks as long as the intermediate uptrend in these stocks continues.
ONGC is in a major uptrend like most of the stock and the indices and has been exhibiting ascending intermediate tops and bottoms. The weekly MACD Histogram has exhibited rising tops in the earlier intermediate uptrend and this suggest that the stock is headed higher than the earlier intermediate top of 1,220 in the current intermediate rise. The next resistance to the stock is at 1,282 where traders can look for some more profits. The relative strength line for the stock is neutral indicating that the stock is performing in line with the indices and investors must avoid the stock. Investors must pick up stocks which are only outperforming and must stay away fro stocks which are exhibiting a bearish relative strength or are performing in line with the indices.
IOC went into a fresh intermediate uptrend on Friday as the stock has made a two week higher close. This confirms an intermediate uptrend and the stock’s close past the high of 577 in the coming week will be bullish and will confirm that the stock will exhibit higher levels in the current intermediate rise. On the weekly charts, the stock has a resistance at 640 where position traders can look to book profits in their long positions. In the short term the stock has a minor resistance at 586 and it will have to first close past this level. The earlier intermediate top is at 662 and this could be the next target after the resistance of 640. As the relative strength line is neutral, investors must stay away from the stock.
BPCL is another stock in the Oil and gas sector which has been in an intermediate uptrend. The stock has been exhibiting ascending intermediate tops and bottoms and is in a major uptrend. The daily, weekly and the monthly momentum indicators are in the buy mode suggesting higher levels for the stock. The next important resistance to the stock is at 556.80, which is the earlier major top and traders must look for profits at this level. Again as the relative strength is neutral, investors must stay away from the stock.
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