Before investing into any stocks, it becomes important to know that which sector is going to outperform so the probability of success increases. Once the sector is finalized then bet can be placed to generate the greater returns. This time we have covered analysis on subsectors to understand which sector is going to outperform in coming years which can help in stock selection process. Below is the part of research taken from “The Financial Waves Monthly Update”.

Looking at the sub-sectors to understand the overall trend:

Stocks,Elliott wave

Stocks,Elliott wave

CNX Midcap index: Looking at Midcap index is very important as this has been the outperforming index during the up move of 2014 - 2016. The entire pattern post 2008 is in the form of running correction and the euphoria created during the final stages might be completing wave …. {Prices are now headed lower in the form of final wave …. which is going to be a panic scenario before next major Bull Trend starts. This index has shown sharp up move in 2014 – 2016 which indicates that we are headed for strong rise post the completion of …..

Bank Nifty: This is one of the leading sectors that topped out even before Nifty and has continued to be a major laggard. This index might result into Nifty moving lower over next few months. Bank Nifty has an important support near 18000 levels and the overall pattern is similar to that of Midcap index.

Capital Goods: This sector had been a major laggard since 2008 and I think the underperformance in 2017 is here to stay. The overall consolidation is again in the form of a classical triangle pattern which needs little explanation.

Oil & Gas: The overall bigger structure of Oil & Gas sector looks similar to that of Capital Good but there is one major difference which is in the final leg. The ongoing up move in Oil & Gas sector has managed to retrace the prior fall completely in faster time thereby hinting that a major low might have been formed and any correction …….

Auto Index: We are bullish on this sector as a whole despite all the pessimism post the Demonetization. The reason being the strong impulsive rise we have seen in this sector from 2009 onwards. The up move is in series of (1) – (2) and 1 – 2 with wave 2 currently ongoing and post its completion ……

IT Index: We would like to take a contrarian stand in this index. Majority are bearish in this index but looking at the impulsive rise and the time correction that has already been 2 years old we might start seeing base formation before the next uptrend starts. So this index …….

In a nutshell, looking at the sub-sectors that comprise the overall Indian equity markets are all in their intermediate downtrend. Post the completion of the correction ……….. can be a major outperforming sectors in 2017. We will highlight it here as and when we see a bottoming formation when the news will seem strongly bearish to majority but now is the time to stay alert as the short term ……!

In above research Elliott wave counts has been removed purposely which is shown in current monthly report. “The Financial Waves Monthly Update” is now published. Understanding the overall trend of Nifty applying Neo wave – Advanced Elliott wave pattern, Time cycles of 54 days and 108 days and January Seasonality. Bank Nifty ratio analysis with Nifty. Understanding the trend of sub-sectors. One Long term pick. Understanding the trend of USDINR. Is Copper trend reversing on upside? Mutual Fund section. Subscribe to “The Financial Waves Monthly update” by visiting and see yourself the long term forecasts and world markets at a glance.