Auto, IT, FMCG: 3 sectors showing short-term strength, says Axis Sec

Nearly 80 per cent of stocks from Nifty Auto, IT and FMCG indices are seen trading above the short-term moving average, indicating strength in the sector, says Axis Securities in a report.

The auto sector is showing strength across time-frames based on the moving averages analysis, highlights Axis Securities in its weekly update on sector-wise moving average distribution.  According to the report,  80 per cent of the Nifty Auto stocks are trading above the short-term 20-Day Exponential Moving Averages (20-DEMAs) and the respective 50-DEMAs. The Nifty Auto index comprises of 15 stocks, the report states that up to 73 per cent of the stocks trade above the medium-term 100-DEMAs, and up to 67 per cent above the long-term 200-DEMAs.  Exponential Moving Averages (EMAs) are commonly used indicators that give more weight to the most recent prices, making them more responsive to new information. A higher number of stocks trading above a particular moving average indicates strength in the underlying sector, explains Axis Securities in the note.   

Sectors showing strength in short-term (above 20-DEMA)

  Apart from Auto, Nifty IT and FMCG sectoral indices are showing strength as per the sector-wise moving average distribution; with 70 per cent and 67 per cent of IT and FMCG stocks trading above their respective 20-DEMAs.  On the flip side, realty sector seems to have taken a beating, with almost 90 per cent of the stocks now trading below the 20-DEMAs, shows the report. 

(Source: Axis Securities) 

 

Sectors showing strength in long-term (above 200-DEMA)

  As many as eight sectoral indices including Nifty Auto are displaying strength as per the long-term moving average. Among the Nifty Metal and Pharma sectors 73 per cent and 75 per cent of the constituents' are quoting above the respective 200-DEMAs.  About 67 per cent of the Nifty Bank, Auto and PSU Banks; and around 60 per cent of Finance and FMCG stocks are holding above the 200-DEMAs.  On the long-term scale, Nifty IT and Media are indicating weakness, with as many 80 per cent of the shares trading below the respective long-term exponential moving averages.