Auto sector surges, auto index up from trendline support

Indian stock markets retreated yet again on Friday after a sudden bounce on the day of May F&O expiry. Thereby, apart from benchmark indices, broader markets and sectoral indices too witnessed a turnaround, barring Auto sectoral. Nifty Auto index traded against the market and was up 0.84 per cent at 14:35 hours. Bajaj Auto which holds 7.2 per cent in the Nifty Auto index surged as much as 4.9 per cent. Maruti and Hero Motocorp which hold 21.7 and 8.8 per cent in the index too are among the top gainers with 3.2 and 2.3 per cent, respectively. Although, nearly half the stocks in the index dropped in line with the markets.

Technically, on the weekly time frame, the stock took a major support at the multiple point trendline level at 10,652 in the last week. As a result, the index bounced back and sustained optimism for the entire week, except for Thursday. However, the index is forming lower tops and hence trendline support breakdown would mean reasonable correction in the index. On the daily time frame, the index has bounced but is consolidating near 38.2 per cent retracement of the downward move from 11,760 to 10,652 levels. Moreover, the index is still trailing below its 100 and 200-day resistance levels.

Going forward, above 11,075-11,150, we hold 11,205 followed by 11,335 as the resistance levels. On the downside, 10,960 followed by 10,840 will act as the support for Nifty Auto index.