Brokerage firm ICICI Direct believes equity benchmark Nifty will challenge the all-time high of 18,600, and eventually head towards 18,900 by December 2022.
In a report on November 3, the brokerage firm said: “We reiterate our constructive stance and expect the Nifty to challenge the all-time high of 18,600. Eventually head towards 18,900 by December 2022 as it is a 161.8% external retracement of the April-June decline (18,115-15,183). In the process, bouts of volatility owing to global uncertainty cannot be ruled out. Thus, dips should be capitalised on as incremental buying opportunities.”
The brokerage firm said its positive stance on the market is based on the following observations:
(a) Breakout from 12 months’ falling trend line confirms the conclusion of corrective bias, in turn, suggesting a resumption of the primary uptrend.
(b) Historically, over the past two decades, Q4 returns for the Nifty have been positive (average 11% and minimum 5%) on 15 out of 21 occasions (70%). History favours buying dips from here on.
(c) On the structural front, the BSE PSU index logged a resolute breakout from a decade-long downward slanting channel, indicating a structural turnaround.
(d) India VIX, which gauges market volatility, has recorded a five-monthly range breakdown and is trading around 16, indicating a low-risk perception among market participants.
(e) Indian equities relatively outperform their global peers, showing inherent strength.
(f) US dollar/INR pair retreated from an upper band of a long-term rising trend line placed at 83.30 while the dollar index has faced stiff resistance from the decade-long resistance trend line.
Broader market indices are rebounding after forming a higher base above the falling channel breakout area coinciding with 52 weeks’ EMA (exponential moving average).
“The formation of higher peak and trough on the monthly chart makes us confident of revising the support base upward at 17,400 as it is the confluence of a 50% retracement of October rally 16,855-17,991 at 17,414 coinciding with 50-day EMA at 17,380,” said ICICI Direct.
Disclaimer: The views and recommendations given in this article are those of the broking firm. These do not represent the views of MintGenie.