Story in a chart: Nifty Metal index may outperform Nifty going ahead

Gaurav Bissa

The Nifty Metal index is showing strong signs of multi-month outperformance compared to Nifty as well as the broader market going ahead. The rationale for the same is mentioned below

Nifty Metal

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The metal index made a bottom around 2016 and witnessed a strong up move since then to make a fresh high. However, post that it has been falling steadily making lower high and lower lows implying the downtrend has been strong.

The index again made a low of around 1,500 which was also the level it touched in 2016 before heading higher. On the monthly charts, the last two candles have made similar lows implying some buying interest emerging in the index.

The index is now bouncing from the long-term demand/support zone as shown in the chart above (blue area). This implies as long as the marked area is sustained this can be one of the first sectors to bottom out. And, hence provide the outperformance.