Nifty PSU index sluggish at breakout level

Nifty PSU index has been highly volatile throughout the year 2017. Index had attempted a multiple resistance breakout at 3780-3790 levels in May 2017, but could not sustain on a weekly closing basis. Thereafter, the index witnessed correction up to 50 per cent retracement level of the prior rally. The level also acted as 20 weeks EMA support for the index.

The index which represents public sector enterprises bounced back in the month of October 2017 after Government announced cash infusion of Rs 2.11 lakh crore in public sector banks along with Rs 1.35 lakh crore bonds.

Nifty PSU index surged as much as 48 per cent in trading sessions from October -23-26. Subsequently, the sector has been consolidating till today. Considering the weekly timeframe, the index has given Cup and Handle pattern breakout at around 3800 levels, but witnessed a pullback just below the trendline level.

Recently the index was struggling at the trendline level in an indecisive manner. Relatively, the weaker volumes and 14-period RSI quoting at 54 suggest lack of momentum as for now. Going forward, we hold 3630-3585 as the immediate supports followed by 3465 levels. On the upside, 3870 followed by 4000-4200 may act as the resistances for the medium term.