Nifty Financial Services surges above 200-DMA!

With the index crossing above the 200-DMA, it has attracted the buying interest and the investor’s attention.

Nifty Financial Services is trending strongly on Monday and has surged over its 200-DMA. This happens to be a key indicator in deciding the long term trend of the underlying and looked upon by many. The sectoral index has gained nearly 0.4% on Monday and is one of the top sectoral index along with Nifty Bank in supporting the Indian market.

The index has taken out a crucial resistance of 17600 and currently trades above it. In the first hour of Monday’s trading session, the index witnessed strong support at lower levels of 17300 and bounced back sharply by about 300 points. With this, it has surged above its 200-DMA which lies at 17576. The index currently trades at a day’s high and looks bullish for the short term. On the technical chart, the index was seen registering higher lows, which is a sign of positivity.

The technical indicators, too, present a bullish view regarding the index. After the dismal performance of the index in the past few weeks, the technical indicators show signs of reversal. The 14-period daily RSI has crossed above the prior swing high. Moreover, the MACD line and the signal line are converging and about to signal a bullish crossover. The negative MACD histogram is steadily decreasing, hinting towards a potential trend reversal. The other momentum oscillators and indicators point towards the improvement in the index.

The stock like HDFC Bank, ICICI Bank, and HDFC constitute over 50% weightage in the index. These stocks have seen good buying interest at lower levels and has gained momentum lately. This has likely propelled the index higher.

On a YTD basis, the index has generated returns of about 2% and has outperformed the benchmark index Nifty, which has generated nearly negative 1% returns.

In a nutshell, the index has indicated signs of revival for the short to medium term. With the index crossing above the 200-DMA, it has attracted the buying interest and the investor’s attention. Considering the overall scenario, it looks those good days will be back once again for the index.