Empirical

Notes

Weekend Rundown: Commodities | IT & FMCG | Adani Stocks


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Last week we discussed the implication of copper price and its relation with the Nifty Smallcap index. As Nifty smallcap residing above its 2018 high and at the same time Copper brokedown after facing resistance from 2011 High. These developments demand a health check for the commodities sector as it impacts the risk environment for emerging markets as a whole.


NIFTY Commodities Index includes stocks from Oil, Petroleum Products, Cement, Power, Chemical, Sugar, Metals, and the Mining sector.

Currently, the price is facing resistance at its 161.80% Fibonacci extension level.

In retrospect, Commodities like Cement, Sugar, Metals had a good run compared to Oil, Petroleum Products, and Mining.



Commodities have outperformed to broader Nifty 50 index. Now the ratio is taking support as its polarity level. So it would be a logical place for commodities to take a break and digest its tremendous gains.


Now looking at individual constituents:

The oil & Gas Index is strong as long as it remains above its multi-year base level.


Nifty 50 relative to OILGAS index is residing at a decisive level. Therefore, a breakdown below 0.95 will accelerate the strength for the OILGAS segment.


Chemicals continue to be the most substantial segment.


No visible sign of weakness in the Cement segment as well.




Now the most important segment: Metals.

Since the covid crash, Metal has been the best performing sector of the market. As it faced resistance at its 2008 high


Sustenance of base metal price above its multi-year breakout level is essential in

understanding the metal sector's upcoming action. There's a lot of action on the top.


Sector Watch

Weekly RRG

  • On a relative basis, long-term underperformers like Media and Realty sector gained while the outperforming sector like Metal and Pharma lost some strength.

  • IT and FMCG remained close to the RRG center, which shows low volatility.


Daily RRG


  • On Daily and Weekly timeframe, IT and FMCG are the strongest sector. So it's better to watch out for a trade setup in stronger names than waiting for a turnaround in weaker ones.

Chart Setup

Tata Consultancy Services (TCS)

- Breakout confirmation above 3320


Tech Mahindra (TECHM)

- Breakout confirmation above 1075



Bazinga Chart

Before this week's news action, Adani group stocks had a huge volume. As a rule in Technical analysis - Volume Precedes Price.

“Stocks do not rise in price unless demand exceeds supply. Demand is measured in volume and thus volume must precede price.” - Joe Granville


Random is not random for everyone, Until Next week.🖖