Break in $NIFTY re-shuffles sector rotation in India

Oct 11 12:10 2018 Print This Article

This article is an extended and updated version of the article that appeared in last weekend's Chartwatchers newsletter.

The Indian $NIFTY Index dropped out of an almost three-year uptrend at the close of last week. The rising support line that started at the low in early 2016 did not manage to hold up and was clearly broken during last week's market action.

This move changes the dynamics of the Indian stock market. On the weekly chart above a new series of lower highs and lower lows has not (yet) begun. So technically it is not a downtrend yet. On the daily chart, however, a series of lower highs and lower lows is visible already since the first week of September.

Relative Rotation Graphs can help to put the move of the $NIFTY index in international perspective as well as help pinpoint sectors within the $NIFTY index that should offer protection against a decline of the general market, or at least an outperformance over $NIFTY.

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