The chart below is the Elliot Wave structure of the BSE Capital goods sector:
The capital goods sector looks set for a sharp decline - potentially embarking on its 3rd sub-division of its 5th wave, which usually tends to be a powerful leg. The sector is also reacting from its 38.2% fibonacci retracement level of its decline from November to May. We would all recall that along with Banks this was a market leader on the way down from Nifty 6338 peak made last year. If my interpretation of the wave structure is right, we should see this index decline to about 12000 from its current level of 13842. The sector leader LT is reacting lower from its 50% Fibonacci retracement level and BHEL too, one of the weakest in this space, is about to establish a downward trendline. Look out below?