Vishal B Malkan
Nifty Auto – A change in Trend
This week witnessed the anxiety of traders, with the bears taking control right after the highs over two consecutive days. Nevertheless, the week ended with a respite to the bulls, albeit for the time being.
The movement in Nifty Auto has been of particular interest this week. After the last spell of downward movement in the beginning of this year, Nifty Auto has witnessed a slow but steady bottom formation in the last three months. Have a look at the daily chart below -
Nifty Auto: Daily chart
The weekly charts too are a testimony to this. One observes a momentum divergence at the last leg of the down move. This is a higher bottom formed with RSI taking support at 40 levels – the support zone for an uptrend. This is a sign of a bottom being formed for a while now.
Nifty Auto – Weekly chart
A few components in the sector too seem to be poised for an up move in the near term. Maruti Suzuki India, Ashok Leyland and Eicher Motors Ltd. display signs of strength in price as well as momentum. Have a look at their charts below:
Maruti: The price seems to be taking support at previous bottom, with bullish candle patterns appearing since the last two weeks. Also, the RSI after moving twice below the 40 levels, has now taken support at that zone, indicating the shift in trend to the upside.
Maruti Ltd – Weekly Chart Ashok Leyland Ltd – After a series of lower tops/lower bottoms, the price has begun making higher top/higher bottoms. The RSI has taken support at Rs 40 levels at the last bottom.
Ashok Leyland: Daily Chart
The auto sector seems to be poised for a good move on the upside. One could capitalise on the medium term bout of positivity in the stocks above.
(The author is Founder of MalkansView)
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