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Bank, Auto Indices Form Bearish 'Death Cross'
Nifty Bank and Nifty Auto indices have both formed a technical 'Death Cross,' signaling a bearish shift. This pattern occurs when the 50-day moving average crosses below the 200-day average, historically indicating a sustained downtrend. Choice Broking analyst Hitesh Tailor warns this signals persistent selling pressure. He advises that market bounces might be opportunities to sell rather than new buying points.
Sector Outlooks and Key Price Levels
For banking stocks, Tailor points out the Nifty Bank index has fallen below key moving averages and faces resistance between 55,000 and 56,000. Its price trend shows lower highs, confirming the downtrend. He expects a 'sell on rise' strategy for Bank Nifty, with potential targets near 53,500 and 53,000 if selling continues. The Nifty Auto index has also seen a 'Death Cross,' facing resistance around the 26,600-26,800 zone, which was previously support. He notes weak buying interest and ongoing consolidation at lower prices, suggesting selling pressure is building. The outlook for Auto is sideways to negative, with downside targets around 25,200 to 25,000.
Stocks Expected to Lag
Based on this outlook, Tailor sees potential underperformance from three stocks: Mahindra & Mahindra (M&M), Hero MotoCorp, and ICICI Bank. M&M has a weak chart, with prices rejected near its 50-day moving average. It faces resistance between ₹3,200–₹3,300 and support around ₹3,100–₹3,000. Hero MotoCorp shows a bearish trend, failing to break above its 50-day moving average. Resistance is near ₹5,300–₹5,500, with support around ₹4,900–₹5,000. ICICI Bank dropped below ₹1,300–₹1,320 support following a previous 'Death Cross.' It faces a downside bias toward ₹1,200–₹1,180.
Stocks Poised for Strength
On the upside, two stocks are expected to perform well. Bharat Forge shows a strong technical setup with higher highs and lows, recently breaking out of a consolidation and holding key moving averages. Its RSI is around 60, indicating steady momentum as the stock nears all-time highs, suggesting further upside potential. Federal Bank shows relative strength, outperforming the broader banking sector. It is holding above its 50-day moving average, indicating demand, and trading near all-time highs with positive momentum. Resistance is around ₹300-₹302, with potential upside toward ₹315-₹325 if it breaks out strongly.