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Indian Sectoral Indices Technical Analysis with Fibonacci Retracement
Index Sector Analysis
Today, we will perform technical analysis of all the sectoral indices included in the Indian stock market, such as the Auto Index, Pharma Index, IT Index, and PSE Index.
What is the purpose of doing technical analysis of indices?
The purpose of analyzing all these indexes is to know the trend of these sectors. Along with this, we also get to know how the stocks included in these indexes will move in the coming time.
PSE Index (Public Sector Enterprises Index)
The PSE index includes stocks of all government companies like Power Finance, REC, Oil India, Power Grid, etc.
Today we will do technical analysis of the PSE index only. We will do analysis of stocks in a separate article.
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| PSE Index (Public Sector Enterprises Index) |
As you can see in this chart, I have just applied the Fibonacci Retracement indicator on the monthly chart.
The Fibonacci Retracement indicator is applied to see to what price or how much % the stock/index can retrace after a sharp rise.
And on the contrary, how much the stock/index can bounce after a sharp fall.
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In this chart, I have applied the Fibonacci indicator during the Covid period, i.e., from March 2020 to July 2024 (All-Time High).
The PSE index has corrected from its all-time high of 11814 to the level of 8064. A correction of 3750 points has come in the PSE index
So far, it is showing a correction of 0.38% on the Fibonacci Retracement indicator.
Generally, there are 5 levels on the Fibonacci Retracement indicator. .23%, 0.38%,.50%,.61%,.78%.
These levels always act as support. The index can bounce back from these levels. Those who want to make long-term investments can look for investment opportunities in the stocks included in this sector.
Before investing, please consult your financial advisor. This article is for educational purposes only.
Now, the Indian market is going down; it is possible that the market may fall further, and the PSE index may also fall.
Note down the 5 levels of Fibonacci retracement because these 5 levels will act as support.
Whenever there is a reversal in the market or the market starts going up, analyze whether the PSE index is near its support or not. If it is, then you can think about investment or swing trading.
Fibonacci Retracement Levels for PSE Index
| Fibonacci Retracement Levels | PRICE |
|---|---|
| 0.23% | 9509 |
| 0.38% | 8081 |
| 0.50% | 6928 |
| 0.61% | 5774 |
| 0.78% | 4131 |
After COVID, the biggest rise was seen in the stocks of government companies.
Now, profit booking is also happening in the stocks of these government companies, but this is creating opportunities for those who missed the earlier boom.
Nifty Media Index
The all-time high of the Nifty Media Index is 3675, which it touched in January 2018. Since then, there has been a lot of growth in the Indian stock market, but till now the Nifty Media Index has not been able to reach its old all-time high, let alone cross it.
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This proves one thing: that there is some fundamental problem going on in the media stocks, which is why the media stocks and the media index are underperforming.
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| Nifty Media Index |
The current market price of the Nifty Media Index is 1386.
You should stay away from investing in media stocks right now once you consult your financial advisor.
Nifty FMCG Index
The Nifty FMCG index has seen a very good rally in the recent past.
At the time of Covid, in March 2020, the Nifty FMCG index was at the level of 27000; in August 2024, it touched the level of 66000, which means the index has more than doubled in 4 years.
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| NIFTY FMCG INDEX |
The current market price of the Nifty FMCG index is 50689.
The Nifty FMCG index is on the verge of touching the 0.38% level of Fibonacci retracement at 49744. (See chart)
Profit booking is also taking place in Nifty FMCG index. The reason for profit booking is that the economy has been in a slowdown for quite some time.
The demand in the market is low; even the festive season that has just passed did not see much demand.
Right now, the Indian market is going down; it is possible that the market may fall further and the FMCG index may also fall.
Note down the 5 levels of Fibonacci retracement because these 5 levels will act as support.
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Whenever there is a reversal in the market or the market starts going up, analyze whether the FMCG index is near its support or not. If it is, then you can think about investment or swing trading.
| Fibonacci Retracement Levels | PRICE |
|---|---|
| 0.23% | 56131 |
| 0.38% | 49744 |
| 0.50% | 44581 |
| 0.61% | 39419 |
| 0.78% | 32068 |
Nifty FMCG Index
The condition of the Nifty Auto Index has been bad ever since major auto companies have talked about the slowdown in the auto sector.
Like all other indexes, the Nifty Auto Index has also seen a huge surge in the recent past. The all-time high of the Nifty Auto Index is 27700, which it reached in September 2024.
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| NIFTY AUTO INDEX |
The current market price of the Nifty Auto Index is 20498. The Nifty Auto index is moving towards touching the 0.38% Fibonacci retracement level of 19032.
No one can tell when the auto sector will boom again. You have to correlate it with the market. Starting in January, auto companies will launch new models; maybe that will boost demand a bit.
| FIBONACCI RETRACEMENT LEVEL | PRICE |
|---|---|
| 0.23% | 22328 |
| 0.50% | 18875 |
| 0.50% | 16085 |
| 0.61% | 13294 |
| 0.78% | 9320 |
Conclusion
I hope you have learned something from the analysis of all these indices. You must have also got some idea of when to invest in these indices and when to avoid investing.
This analysis was for educational purposes; you must consult your financial advisor before investing.
FAQ
1. What is the purpose of technical analysis for sectoral indices like PSE, FMCG, or Auto?
Technical analysis of sectoral indices helps identify trends, support/resistance levels (e.g., Fibonacci retracement), and potential price movements.
It provides insights into how sectors might perform in the future, aiding long-term investors and traders in timing entry/exit points.
2. What is the PSE Index, and what does its Fibonacci analysis reveal?
The PSE Index tracks government-owned companies like Power Finance, REC, and Oil India. After a 3,750-point correction from its all-time high (11,814 to 8,064), it currently tests the 0.38% Fibonacci level (8,081). Key support levels to watch are:
0.23% (9,509)
0.50% (6,928)
0.78% (4,131)
Investors may consider these levels for long-term opportunities if the market rebounds.
3. Why is the Nifty Media Index underperforming?
The Nifty Media Index peaked at 3,675 in 2018 but now trades at 1,386, failing to recover despite broader market growth.
This underperformance suggests fundamental challenges in the media sector, such as shifting consumer preferences or regulatory issues. Investors are advised to avoid media stocks until the sector shows recovery signs.
4. What is the outlook for the Nifty FMCG Index?
The Nifty FMCG Index surged from 27,000 (March 2020) to 66,000 (August 2024) but faces profit booking due to slowing demand. It nears the 0.38% Fibonacci support (49,744). Key levels to monitor include:
0.23% (56,131)
0.50% (44,581)
0.78% (32,068)
Investors should wait for a market reversal and confirm support before considering investments.
5. Why is the Nifty Auto Index struggling?
The Nifty Auto Index hit an all-time high of 27,700 (September 2024) but now trades at 20,498, approaching the 0.38% Fibonacci level (19,032).
A slowdown in auto sales and delayed demand recovery are key concerns. Potential triggers for revival include new model launches in January. Fibonacci levels to watch:
0.23% (22,328)
0.50% (16,085)
0.78% (9,320)
6. How do Fibonacci retracement levels help in index analysis?
Fibonacci retracement levels (23%, 38%, 50%, 61%, 78%) act as critical support/resistance zones after sharp price moves. For example, if an index corrects after a rally, these levels help identify where it might stabilize or reverse. Traders use them to plan entries, exits, or risk management strategies.
7. When should I consider investing in these indices?
Consider investment or swing trading opportunities when:
The index nears a Fibonacci support level (e.g., 0.38%, 0.50%).
The broader market shows a reversal from a downturn.
Sector-specific catalysts emerge (e.g., policy changes, demand revival).
Always consult a financial advisor before making decisions.
8. What risks are associated with sectoral index investing?
Key risks include:
Market volatility impacts support/resistance levels.
Sector-specific challenges (e.g., FMCG demand slowdown, auto sector delays).
Overreliance on historical data without factoring in current fundamentals.
9. Are these analyses suitable for long-term investors?
Yes, technical analysis (especially Fibonacci levels) helps identify long-term entry points. However, combine it with fundamental analysis (e.g., sector growth prospects, company financials) and professional advice for balanced decisions.