The current scenario of the Indian markets is very similar to that of CY13, CY16 and CY18, a report by Moneycontrol pointed out. As per the report, in each of these instances, higher base formation consumed around three to four months and retraced the preceding up-move by around 50-60 percent, followed by new highs over the next quarter. The same is happening right now.
“In the current scenario, after four month’s decline, the index has risen higher over the past two months and now just shy of its all-time high,” said the report quoting ICICI Direct.
“Hence, dips should be used as an incremental buying opportunity to ride the next leg of up-move towards 18,900 in the coming months,” it added.
Experts also told Moneycontrol that the formation of higher peaks and troughs on the monthly chart makes them confident to revise the support base at 17,800 for the index.
The report also forecasted that Bank Nifty, which hit an all-time high of 44,483.35 on May 29, is also set to cruise higher. Experts expect the index to gradually head towards 45,400 levels in a nonlinear manner in the coming month as it is a 123.6 percent extension of the entire December 2022-March 2023 decline (44,151-38,613), it mentioned.
“However, after the recent sharp up-move of 15 percent in just eight weeks, the weekly stochastic is at an overbought territory with a reading of 93. Hence, a breather of a couple of weeks in the broad range of 44,200-42,500 cannot be ruled out. It should not be seen as negative. Instead, dips should be used as a buying opportunity,” ICICI direct advised.
Similarly, analysts also noted that the Nifty Midcap 100 index is at the cusp of resolving out of 18 months consolidation range (33,240-25,050) at life highs as well, signaling the resumption of a structural up-trend, stated the report.
“The faster retracement signifies structural improvement that would fuel to accelerate the upward momentum. Structurally, we expect the mid-cap index to witness a 25 percent rally in the coming 3-4 quarters being the measuring implication of 18 months consolidation breakout,” said ICICI direct, adding that the next milestone for the midcap index is at 36,600.