Nifty Midcap Index - Time to go Shopping

Indian share markets have underperformed global peers in the month of January 2023.

The benchmark index Nifty 50 is down by over 2%, while most of the global equity indices are trading on a positive note.

The January F&O series ended in a range giving an opportunity to option writers. The February 2022 series has started with a bang for the bears.

The icing on the cake as expected is the volatility ahead of the Union Budget 2023.

Traders had the premiere ahead of the movie yesterday as the Nifty swung about 975 points and the Bank Nifty moved over 3,500 points on an intraday basis.

This is the time when traders must manage risk and protect their capital.

Midcap Index - Favourable Risk-Reward

In yesterday's sell-off, the first ones to get hammered were small-cap and midcap stocks.

Nifty Midcap Index, Daily Chart

 

Technically, the index is trading at the make-or-break levels of the chart pattern.

The broadening triangle or megaphone pattern is visible on the daily chart with the support placed at 29,800.

Index has retested the support zone on Friday last week and managed to hold on yesterday, indicating the bears may lose the plot to the bulls.

If the bulls manage to reverse the trend from the support zone, the expected target can be 10% to the upper band of the broadening triangle while the downside risk is less than 2%.

Traders should look for favourable low-risk, high-reward setups when the market takes a dip.

In case you are looking for midcap stocks to add to your watchlist, watch my latest video.

On the lower panel of the chart, the relative strength of Midcap Index/Nifty50 is highlighted.

The oscillator is trending in the red which means the Midcap index is underperforming against the Nifty50 for the past 2 weeks.

In volatile times, midcaps stocks are bought aggressively, and the trend may reverse with midcap outperformance.

It all depends on the outcome of the Budget but the chart indicates the bulls may come back strongly.

At present, the Nifty midcap index is trading 1.3% higher or up by 400 points.

I'll share more on his trend on my Telegram group. If you're interested in being part of my charting journey as I share how to create wealth from profitable trade setups, join my telegram channel - Fast Profits Daily.

Disclaimer: This article is for information purposes only. It is not a stock recommendation and should not be treated as such. Learn more about our recommendation services here.