SWINGTrader India - Monthly Big Picture October 05 2021
October 05 2021 | Reading Time: 10 Minutes
Nifty50 – 17,618.15, gained 2.84% last month
The index moved in sync with our expectations mentioned in our previous monthly report published on September 3 and a couple of weekly reports published on September 20 and September 27. We had stated, “the index may rise beyond the 18,000 mark in the coming days. However, it may face some psychological resistance, and profit-booking cannot be denied’’.
Summary: All the above-mentioned multi-timeframe technical parameters, along with the O’Neil Methodology of market direction, indicate the index is in a strong bullish trend. However, it is facing strong resistance around the psychological level of 18,000. Hence, we expect the index may remain volatile and choppy in the upcoming weeks in the range of 17,300–18,200. Further, the index must cross and hold above 17,850–17,900 to gain from current levels.
We advise our patrons to follow a cautious approach, and fresh bullish calls can only be taken above 17,850–17,900 for further upside towards 18,200. However, failure to cross and hold above 17,900 may turn volatile toward 17,300.
FII/ DII Activity for the Last Six Months
Indian Sectoral Coverage (As of October 05, 2021) – As per O’Neil Methodology
Current Status of Major Global Indices – As per O’Neil Methodology
Sectoral Analysis
Bank Nifty – 36,424.60, gained 2.75% last month
The index broke out above 36,000 in August’s last week and traded almost in line with the overall market move in September. Last month, it traded in line with our expectations as mentioned in our previous monthly report. This major sectoral index has gained 2.75% and formed a bullish candle with a higher-high and higher-low price structure on the monthly chart.
Summary: Our bias would remain positive above the 36,000 mark. Also, this sectoral index is most probably ready to move toward the 40,000 mark in the next few weeks and month(s).
Nifty FMCG – 40,426.55, gained 2.27% last month
In the previous monthly report, published on September 3, we mentioned, “This sectoral index is in a secular bullish trend, and we expect sustainable trading above 40,000 levels may open a fresh upside window toward the 41,000–42,000 mark in the next few weeks”. It has gained 2.27% last month and formed a bullish candle with an upper wick on the monthly chart.
The index recorded a lifetime high of 41,822 on September 22 and fell from that level due to profit booking at higher levels. But the volume on down days was comparatively low.
Summary: The index has already retaken its 21-EMA on October 1 and reclaimed it on the same day. The index came under pressure due to a profit booking in the last week of September. Looking at the multi-timeframe charts, we expect this index may remain volatile while trading in a sideways zone. Further, a fresh bull call can be initiated once the index crosses and holds above 41,000–41,200.
Nifty Metal – 5,611.25, lost 1.81% last month
The index has lost around 1.81% in September. In our report published on September 3, we had mentioned, “the index is facing resistance near 5,800–6,000 levels. Hence, a fresh bull call can only be taken above this level. A failure to cross this level may turn the index volatile in the 5,000–6,000 range”. The index has traded in the range of 5,269–5,914 this month.
Summary: The index is still trading in a bullish zone on higher time frame charts, i.e., weekly and monthly charts so far. Now, the index has reclaimed its 50-DMA and is trending above all its key moving averages on the daily chart. We would like to reiterate our earlier opinion for this month, a fresh bull call can only be taken once the index crosses and holds above the 5,900–6,000 mark. However, failure to cross these levels may turn volatile in the range of 5,000–6,000.
Nifty Auto - 10,598.45, gained 5.62% last month
This sectoral index moved almost in line with our expectations mentioned in our previous monthly report and traded in the range of 10,000–10,800. The index has gained around 5.62% in September and formed a bullish candle on the monthly chart. Further, the index has moved to ‘’Rally from a Rally Attempt’’ on September 27.
Summary: The multi-timeframe analysis of this sectoral index indicates that this index is trading near its breakout level, and sustainable trading above 10,800 may lead this index toward the 12,000 mark in the coming few weeks and month(s). However, failure to cross and hold above 10,800 may turn volatile in the range of 9,800–10,800.
Nifty Energy – 22,858, up 12.66% last month
The index traded higher beyond our expectations and gained 12.66% last month. The index has formed a large bullish candle with a higher-high, higher-low price structure on the monthly chart.
Summary: Our bias would remain positive on this sectoral index, and we expect it would gradually move up from the current levels toward 25,000–26,000. However, some profit-booking cannot be denied at higher levels as it has gained consecutively in the last six weeks. Hence, we advise our subscribers to trail stop losses and remain invested in this space. Further, one can follow a buy-on-dip strategy on specific counters in this space with the respective stop loss.
Nifty IT – 35,028, up 1.32% last month
This sectoral index outperformed and moved beyond our expectations and triggered profit booking at a higher level, as mentioned in our previous report. In the third week of the last month, it touched a new all-time high at 37,823, but profit booking at the higher level in the last week of September turned negative.
The index has formed an “inverted hammer” candle pattern on the monthly chart after four consecutive months of gains. Also, it formed a “bearish engulfing” candlestick pattern on the weekly chart observed by higher volumes and an “evening star” pattern on the daily chart.
Summary: The multi-timeframe analysis indicates this index is likely to remain in the sideways zone with negative bias. Further, this index has immediate support around 34,500, and sustainable trading below this level may open a fresh downside window. Overall, we expect this index to remain in the sideways zone of 33,400–37,200.
Nifty Realty – 513.80, up 32.83% last month
The Realty index has outperformed the entire Indian sectoral index basket and gained around 32.83% in the last month. It moved in line with our expectations and touched a high at 520 levels. Last month, this index formed a large bullish candle with a higher-high, higher-low price formation on the monthly chart.
Summary: This sectoral index is in a secular bullish trend, and we advise following the buy-on-dip strategy in this particular space. We expect the outperformance of this sector to remain in continuation, and it may gain further from the current level. Further, 490-500 is the key level, and our bias would remain positive above these levels.
And we expect sustainable trading above 490–500 levels may lead this index toward 550–600 kinds of levels in the coming weeks and month(s). However, failure to hold above 490 may result in a sideways sort of move.
Nifty Pharma – 14,466, up 0.85% last month
The index traded sideways in line with our expectations published in our last monthly report dated September 3. The index gained approximately 0.85% last month and formed an inside range bullish candle with a lower wick with a higher-high, higher-low price structure on the monthly chart.
Summary: After considering and analyzing these factors, 14,700–14,800 levels is a key level to watch and a fresh bull call can only be taken above this level. We expect sustainable trading above 14,700–14,800 to lead this index toward the 17,000 mark in the next few weeks and month(s). However, on the flip side, failure to trade below 14,800 may remain volatile in the range of 14,800–13,700.
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The index moved in sync with our expectations mentioned in our previous monthly report published on September 3 and a couple of weekly reports published on September 20 and September 27. We had stated, “the index may rise beyond the 18,000 mark in the coming days. However, it may face some psychological resistance, and profit-booking cannot be denied’’.
- In September, the benchmark index Nifty50 recorded a new all-time high of 17,947 and afterward turned volatile. However, it has gained 2.84% on a monthly basis and formed a bullish candle with an upper shadow on the monthly chart with a higher-high and higher-low price structure. The technical indicators like RSI and MACD are trending upward with a positive crossover on the monthly chart with strong momentum. Another observation on the monthly RSI chart is that it has reached a historic level and touched the RSI trendline connecting the high of 2008 and 2014.
- On the weekly chart, the index traded with strong bullish momentum and formed bullish candles in all consecutive weeks, except for the last week of September. It witnessed some profit booking in the last week of September and formed a bearish candle. However, it has protected the prior week’s low and formed an inside range bearish candle. The momentum indicator RSI is trending in a bullish trajectory, placed around 74–75 levels, along with a positive crossover on MACD above the central line. Further, long-term key moving averages on the weekly chart are trending upward, indicating a strong bullish trend from a long-term perspective.
- Likewise, the benchmark index is trending above the upward sloping trendline and 21-EMA, along with higher-top and higher-bottom price structure formation on the chart daily. However, it has breached this trendline in the last week of September and is now trading below it. However, it took support around 21-EMA and bounced from that level. Currently, the index is trading 5% and 15% above 50-DMA and 200-DMA, respectively. The momentum indicator RSI is trending in the bullish zone of 40–80 and currently placed around 64. However, another trend-following technical indicator, MACD, is trending in a downward slope with a negative crossover on the daily chart.
- Further, as per the O’Neil Methodology of market direction, the current market is in a “Confirmed Uptrend” with three distribution days in the last 25 trading sessions.
Summary: All the above-mentioned multi-timeframe technical parameters, along with the O’Neil Methodology of market direction, indicate the index is in a strong bullish trend. However, it is facing strong resistance around the psychological level of 18,000. Hence, we expect the index may remain volatile and choppy in the upcoming weeks in the range of 17,300–18,200. Further, the index must cross and hold above 17,850–17,900 to gain from current levels.
We advise our patrons to follow a cautious approach, and fresh bullish calls can only be taken above 17,850–17,900 for further upside towards 18,200. However, failure to cross and hold above 17,900 may turn volatile toward 17,300.
FII/ DII Activity for the Last Six Months
Indian Sectoral Coverage (As of October 05, 2021) – As per O’Neil Methodology
Current Status of Major Global Indices – As per O’Neil Methodology
Sectoral Analysis
Bank Nifty – 36,424.60, gained 2.75% last month
The index broke out above 36,000 in August’s last week and traded almost in line with the overall market move in September. Last month, it traded in line with our expectations as mentioned in our previous monthly report. This major sectoral index has gained 2.75% and formed a bullish candle with a higher-high and higher-low price structure on the monthly chart.
- Although the index is trading above all key moving averages on the daily chart and on higher time frame charts, it has underperformed the overall market in the last nine months. However, it moved almost in line with market moves and is currently placed 4.87% and 21.64% above its 50-DMA and 200-DMA, respectively. Further, now this index moved into a Confirmed Uptrend as per the O’Neil Methodology of market direction.
- The momentum indicator RSI on the monthly and weekly charts is in a positive slope after six months of consolidation, along with a positive MACD crossover and slope. However, daily MACD is still trending below its signal line. Apart from RSI and MACD, another technical indicator, ADX/DMI, on the monthly and weekly charts, indicates strong moves in the upcoming weeks and month(s).
- Further, a relative strength study on the weekly and monthly time frame charts suggests this sectoral index may gain from current levels in the coming weeks and month(s).
Summary: Our bias would remain positive above the 36,000 mark. Also, this sectoral index is most probably ready to move toward the 40,000 mark in the next few weeks and month(s).
Nifty FMCG – 40,426.55, gained 2.27% last month
In the previous monthly report, published on September 3, we mentioned, “This sectoral index is in a secular bullish trend, and we expect sustainable trading above 40,000 levels may open a fresh upside window toward the 41,000–42,000 mark in the next few weeks”. It has gained 2.27% last month and formed a bullish candle with an upper wick on the monthly chart.
The index recorded a lifetime high of 41,822 on September 22 and fell from that level due to profit booking at higher levels. But the volume on down days was comparatively low.
- Although this index is in a secular bullish trend, the analysis of multi-time frame charts gives a different picture as this index has formed a bearish candle on the weekly chart.
- The momentum indicator RSI and MACD show some negative vibes on the daily chart as RSI has moved downside and MACD has given a negative crossover on September 23. However, these indicators do not indicate negativity on weekly and monthly charts.
Summary: The index has already retaken its 21-EMA on October 1 and reclaimed it on the same day. The index came under pressure due to a profit booking in the last week of September. Looking at the multi-timeframe charts, we expect this index may remain volatile while trading in a sideways zone. Further, a fresh bull call can be initiated once the index crosses and holds above 41,000–41,200.
Nifty Metal – 5,611.25, lost 1.81% last month
The index has lost around 1.81% in September. In our report published on September 3, we had mentioned, “the index is facing resistance near 5,800–6,000 levels. Hence, a fresh bull call can only be taken above this level. A failure to cross this level may turn the index volatile in the 5,000–6,000 range”. The index has traded in the range of 5,269–5,914 this month.
- The index has formed two consecutive bearish candles with a lower shadow on the monthly chart and sent alarm bells ringing for investors.
- Further, on the daily and weekly charts, the index has traded sideways in a rectangular price structure and formed a zig-zag kind of price pattern with high volatility in the last two months.
- The momentum indicator RSI is still trending in a bullish trajectory on weekly and monthly charts and is gaining strength on the daily chart. However, weekly MACD is still trading with a negative crossover.
- Likewise, on the daily chart, the index has cleared the immediate hurdle of its key moving averages, i.e., 21-EMA and 50-DMA.
Summary: The index is still trading in a bullish zone on higher time frame charts, i.e., weekly and monthly charts so far. Now, the index has reclaimed its 50-DMA and is trending above all its key moving averages on the daily chart. We would like to reiterate our earlier opinion for this month, a fresh bull call can only be taken once the index crosses and holds above the 5,900–6,000 mark. However, failure to cross these levels may turn volatile in the range of 5,000–6,000.
Nifty Auto - 10,598.45, gained 5.62% last month
This sectoral index moved almost in line with our expectations mentioned in our previous monthly report and traded in the range of 10,000–10,800. The index has gained around 5.62% in September and formed a bullish candle on the monthly chart. Further, the index has moved to ‘’Rally from a Rally Attempt’’ on September 27.
- Last month, this index turned positive after two months of negative trading and approached our breakout level of 10,800 on the monthly chart. Analysis of monthly RSI suggests a sideways trend, and it may turn bullish once RSI crosses 65 on the monthly chart.
- On the weekly chart, this index is trading between symmetrical triangles and currently trading around the upper band of the triangle. Weekly RSI is trending upward, and MACD is ready to cross its signal line in the bullish zone.
- Further, the index is trading above all key moving averages on the daily chart and is currently placed around 4.5% above its 50- and 200-DMA.
Summary: The multi-timeframe analysis of this sectoral index indicates that this index is trading near its breakout level, and sustainable trading above 10,800 may lead this index toward the 12,000 mark in the coming few weeks and month(s). However, failure to cross and hold above 10,800 may turn volatile in the range of 9,800–10,800.
Nifty Energy – 22,858, up 12.66% last month
The index traded higher beyond our expectations and gained 12.66% last month. The index has formed a large bullish candle with a higher-high, higher-low price structure on the monthly chart.
- As expected, the energy sector took support at the lower band of upward sloping parallel channels starting from the low of October 2020 to July 2021 and gained for six consecutive weeks.
- Likewise, the index formed consecutive bullish candles on the weekly chart and traded in a secular bullish trend between the upward sloping parallel channel.
- The index is trending above all its key moving averages on all time frame charts. It is currently placed 12.56% and 20.52% above its 50- and 200-DMA, respectively.
- The momentum indicator RSI is in a bullish trajectory on multi-timeframe charts, along with a positive MACD crossover.
Summary: Our bias would remain positive on this sectoral index, and we expect it would gradually move up from the current levels toward 25,000–26,000. However, some profit-booking cannot be denied at higher levels as it has gained consecutively in the last six weeks. Hence, we advise our subscribers to trail stop losses and remain invested in this space. Further, one can follow a buy-on-dip strategy on specific counters in this space with the respective stop loss.
Nifty IT – 35,028, up 1.32% last month
This sectoral index outperformed and moved beyond our expectations and triggered profit booking at a higher level, as mentioned in our previous report. In the third week of the last month, it touched a new all-time high at 37,823, but profit booking at the higher level in the last week of September turned negative.
The index has formed an “inverted hammer” candle pattern on the monthly chart after four consecutive months of gains. Also, it formed a “bearish engulfing” candlestick pattern on the weekly chart observed by higher volumes and an “evening star” pattern on the daily chart.
- The index breached its 21-DMA due to profit-booking in the last week of the month. It continues to trade with some negative bias. Currently, this index is trading 4.78% and 24.92% above its 50-DMA and 200-DMA, respectively.
- Apart from the price structure, technical indicators like RSI, MACD, and DMI/ADX are trending in a sideways zone with a negative bias on daily and weekly charts.
Summary: The multi-timeframe analysis indicates this index is likely to remain in the sideways zone with negative bias. Further, this index has immediate support around 34,500, and sustainable trading below this level may open a fresh downside window. Overall, we expect this index to remain in the sideways zone of 33,400–37,200.
Nifty Realty – 513.80, up 32.83% last month
The Realty index has outperformed the entire Indian sectoral index basket and gained around 32.83% in the last month. It moved in line with our expectations and touched a high at 520 levels. Last month, this index formed a large bullish candle with a higher-high, higher-low price formation on the monthly chart.
- It broke out above a small trendline connecting the high of March 2021 to July 2021 on the monthly chart, with RSI and positive MACD crossover.
- The index is trending above all its key moving averages on all time frame charts. It is currently placed 23.91% and 45.42% above its 50-DMA and 200-DMA, respectively.
- The slope of the momentum indicator RSI is trending upward in the bullish zone on the weekly and monthly charts, along with a positive MACD crossover.
Summary: This sectoral index is in a secular bullish trend, and we advise following the buy-on-dip strategy in this particular space. We expect the outperformance of this sector to remain in continuation, and it may gain further from the current level. Further, 490-500 is the key level, and our bias would remain positive above these levels.
And we expect sustainable trading above 490–500 levels may lead this index toward 550–600 kinds of levels in the coming weeks and month(s). However, failure to hold above 490 may result in a sideways sort of move.
Nifty Pharma – 14,466, up 0.85% last month
The index traded sideways in line with our expectations published in our last monthly report dated September 3. The index gained approximately 0.85% last month and formed an inside range bullish candle with a lower wick with a higher-high, higher-low price structure on the monthly chart.
- The index is trending above all its key moving averages on all timeframe charts. It is currently placed 1.31% and 7.53% above its 50- and 200-DMA, respectively.
- The momentum indicator RSI is bullish on multi-timeframe charts; however, MACD is still trading in a negative crossover.
- Further, this index gave a breakout above the trendline connecting the high of July 2021 to September 2021 on the weekly chart.
Summary: After considering and analyzing these factors, 14,700–14,800 levels is a key level to watch and a fresh bull call can only be taken above this level. We expect sustainable trading above 14,700–14,800 to lead this index toward the 17,000 mark in the next few weeks and month(s). However, on the flip side, failure to trade below 14,800 may remain volatile in the range of 14,800–13,700.
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