State of the Market|Reading the Psychology of the market

Here’s why? - one can be bullish on Steel, Frontline tech and Pharma stocks. I covered this topic on NDTV Profit 2:30 Factor show yesterday.

HOPE SECTOR: Steel, Frontline Tech and Pharma stocks

Right now, Nifty is trading below 100 day moving average, but all frontline liquid stocks in Steel, Tech and Pharma are trading above 100 dma, which means the stocks of these sectors are well positioned to rally. Though these stocks have corrected along with the market, they all have found support either at 50 dma or 100 dma and have bounced back strongly from those support levels. If the market is in for temporary correction, then the stocks of these sectors are positioned to lead the market up..

Let us look at the charts:

1. Tata Steel has bounced from 100 dma of 552. SAIL is also trading above 100 dma of 197


Source: Chartalert [www.chartalert.com]

2. Among Tech stocks, Infosys, HCL Tech and Wipro all have found support at 100 dma whereas TCS has been holding on to 50 dma.


Source: Chartalert [www.chartalert.com]

3. Among Pharma stocks, Ranbaxy, Sun Pharma, and Cipla all have found support at 100 dma whereas stocks like Lupin and Aurbindo Pharma have bounced strongly from 50 dma.


Source: Chartalert [www.chartalert.com]

NIFTY is trading below 100 dma

Consider this - Nifty is trading below 100 dma and 20 week ma which it never violated conclusively in last 9-10 months.

Source: ChartAlert

In this environment, when Nifty has already slipped below 100 dma - any stock holding above the 100 dma represents strength and HOPE

I hope you found this article useful. Do share your views. As always, please note this is not a trading recommendation.

Disclaimer - The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writer