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    Teflon-coated rally? Nifty chart readers predict whether market will top out at 19,000

    Synopsis

    Technical analysts say the chart patterns of benchmark indices do not show indications of topping, nor do the broad market performance point to froth or bubble situations.

    Teflon-coated rally? Nifty chart readers predict whether market will top out at 19,000Agencies
    NEW DELHI: Having rallied over 23% in a span of just four months after hitting a one-year low OF 15,183, the rally in India's heartbeat index Nifty now looks unstoppable and poised to cross 19,000-mark in near term despite hiccups.

    Chart readers say Nifty is currently indicating a breakout from the neckline zone of 18,550 of the Inverted Head & Shoulder pattern formed on the daily chart.

    Domestic brokerage firm Prabhudas Lilladher expects Nifty to rally up to 19,800-20,000 in the near term.

    "We anticipate further upside potential with most of the frontline stocks like RIL, Infosys, TCS, HDFC Bank, ICICI Bank, Axis Bank, HUL, M&M, Tata Motors looking good and have much upside space in the coming days. Some consolidation or perhaps a short correction cannot be ruled out but there is inherent strength overall with the bias maintained strong and expected upward move in the next 3-4 months," Vaishali Parekh, Vice President - Technical Research, Prabhudas Lilladher, said.

    In the medium term, Sharekhan has a target of 19,900.

    "On the downside, 18,700-18,600 has now become a short term base for the Nifty. Reversal for the short term bullish stance can be trailed below this support zone," said Gaurav Ratnaparkhi, Head of Technical Research, Sharekhan by BNP Paribas.

    Technical analysts say the chart patterns of benchmark indices do not show indications of topping, nor do the broad market performance point to froth or bubble situations.

    In the meantime, fear gauge index India VIX has fallen from 22 levels to 13 now, suggesting that traders are comfortable seeing such lofty levels in stocks and indices for a sustained period.

    "While several stocks and indices are near previously projected short term targets, we are encouraged to assume that there are conditions to expect extension in upmoves," said Anand James, Chief Market Strategist at Geojit Financial Services.

    With almost 50% of NSE stocks trading below 200-DMA, and with only about 25% stocks near their 52-week-high levels, there is no reason to freeze in the headlights of Nifty’s record peak, he said.

    However, while markets are riding on a new found mojo boosted by improved chances of a less aggressive US rate hikes, easy money will still be hard to find as central banks across the world are still fighting inflation.

    A Reuters poll of 27 analysts, brokers and strategists shows that the Street expects Nifty to hit 19,500 by mid-2023, and reach 20,500 by end-2023.

    Global brokerage Goldman Sachs had recently warned that India's market valuation is expensive in absolute terms, relative to its own history and bonds, and at record premium against the rest of the region.

    "MSCI India is currently trading at 22x forward P/E, which is 1.6 s.d. and 30% above its long-term average of 16.7x since 2004 and at 85% percentile of its valuation range over the past decade. It remains the most expensive market in the Asian/EM region and is trading at an elevated PE valuation premium of 80% vs. the regional MXAPJ index (2.5x the long-term average premium of 30%) and 60% premium over regions excluding China," it said.

    Nevertheless, Goldman also expects Nifty to reach 20,500 by end-2023.

    (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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