Nifty is Warming up for a New All-Time High

Hello viewers. Welcome to the Fast Profits Daily. Myself, Brijesh Bhatia.

Well, Nifty has been very, very volatile, considering the Russia and Ukraine war. We have seen even global markets tumbling down. But if you look at the Nifty, it has been holding quite strongly around 16,700-17,000 zone.

What will be momentum for next 2 to 3 months? Let's look at first the broader market, which is the Nifty 500, which consist of large-cap and mid-cap stocks.

 

So if you look at the first chart over here, this is Nifty 500 chart on a larger scale from 2010. And this is a weekly scale chart which I have been showing you.

If you look at the two red lines, which is the rising channel trending line, if you look at the rising channel since 2010, it has been trending on a positive side. We have witnessed a break out in 2021 and it has being consistently trading above the breakout level now, though there could be the retest possible which is placed around 14,400-14,500.

If you look at the 50 days average, which is a weekly average, which is generally known as medium term on a weekly scale, so 50 weeks is basically of one year average generally. We have 52 weeks in a year. So the reason we take 50, it consists of around a year of the moving average. If you look at the average, it's placed around 14,052 which is nearly the retest level or the breakout retest level.

So I think if you look at the structure, it's very, very, very bullish. And once the rising channel breakout happens, the trend can continue to rally on the positive site.

This indicates that, if you look at the broader market, though we have been a sharp correction in midcaps and smallcaps, which are trading below their 200 days average, but if I just look at the Nifty500 and Nifty50, which generally sets the trend for the momentum of the midcaps and smallcaps, they are very much trending higher.

Let's analyse the Nifty 50 as well. So I would start with the seasonality analysis.

So if you look at the screen over here, this is the table of seasonality analysis month-on-month, how Nifty has performed. If you look at March, the yellow mark, for the March series generally Nifty has an average gain of minus 0.1%. There has been a mixed bag for the March series. If you look at it from 1996, so if you look at 26 years of data, on an average, 46% belongs to bulls, which is around 12 months and 54% belongs to bears, which is our 14 months. So it has been a mixed bag.

If you look at the average fall, it's showing at 0.1% but if you look at the two years in-between, which is around 23% fall in 2020 and 15% fall in 2001, if I just eliminate it, it gives a gain of a percent. So this has been an extreme cases the 23% and 15%. But if you look at the overall, it has been slightly plus and minus here and there.

Interestingly, if you look at the April month, it has a gain of around 2%, an average gain of 2% for the last 26 years. So I believe probably March might be a sluggish month. We might see ups and downs happening into March but I believe start of the April and May and June, if you look at the April 2% average gain, May 1% average gain, June 1.5% average gain.

So I think probably post march or by mid-March we might see the rally starting, which might head Nifty towards a new all-time high.

Again, we will look at the structure. What are the levels you should look at? So look at the next chart, which is showing the Nifty 50 demand zone.

 

If you look at the green line, this is a regression channel. It highlights the support zone around 16,400-16,350 zone. If you remember, the previous lows, which has been hit, was around 16,400 levels again. So I believe 16,400-16,500 will play a key important role over here.

Plus, if you look at the 200 days average, it has been acting as a very, very strong support. If you look at the historical data, generally Nifty tends to an average way of around 2-2.5% from 200 days average. So if you look at the average as of now, it's 16,850. If I take 2%, 303-350 points, it's somewhere around 16,500 levels. So I'm really 16,300-16,500 will play a key important support zone for Nifty.

 

If you look at the same chart with the RSI, which is generally shows the strength of the momentum, again, this is the daily RSI. Generally, when the RSI falls between 40 to 30, Nifty tends to see a positive momentum. Again the support will play a key, important role over here. But looking at the momentum this week, we again yesterday hit a low of 16,800 which has been acting as a huge support zone for now.

So I believe if you look at the momentum over here, it's still into the bulls court because the broader market is very, very bullish. Nifty is trading at a good support zone. RSI is moving between 40-50. 30-40 is usually a good sign for bullish trend to set out.

So probably a minor resistance might play out. If you look at the blue lines on the chart over here in the triangle structure, the resistance is placed somewhere around 17,400 levels and the recent high of 17,500.

So once the 17,400-17,500 is breached, I believe we are heading for 19,000-19,200 levels on the Nifty, and this could be the level one should definitely watch.

So my take is that if the Nifty breaks the resistance at 17,500 levels, we are heading for a fast and furious rally. Probably March, may be sluggish but since April, I believe that markets might see a huge trend in positive momentum.

Once this dust settles down between the Russia and Ukraine, we think that markets might settle down, volatility might settle down. Again this is an uncertain scenario of the war but on the downside, one should definitely look for support between 16,400-16,500 and upside, 17,500 will play a minor resistance for March series.

So keep a watch on these levels. Once 17,500 is taken out, I think if you remember June and July of 2021 when markets trended in a narrow range but once the breakout happened in August, start of August, we saw a huge rally from 16,000-17,200.

So probably I'm expecting that rally might be possible, once the 17,500 levels are breached on the positive side. So keep watering these levels for Nifty and hope that markets might trend bullish again towards a new all-time high.

Signing off Brijesh Bhatia.