Nifty Technical View
- In a tight range 14100-14150 on downside and 14700-14750.
- Lower Tops and Lower Bottoms but not sharp ones, indicate a correction and consolidation period.
- A move beyond this might need some positive or negative triggers.
- Momentum if it can cross 14750
Nifty Midcap 100
- Flatter range with almost 3-5 bottoms around the same zone.
- Relative Outperformance to Nifty
- Stock specific action to continue but could be more selective.
Nifty Smallcap 100
- Flatter and Sideways range with 3-5 bottoms around the same zone.
- Relative Outperformance to Nifty not due to a major upside but lesser fall compared to Nifty.
- Time to be Stock Specific.
Sunday Thoughts on Nifty
- The current market behaviour looks similar to the 2015-2016 period.
- The Index broke out into multi-year highs after 6 years and a strong sentiment on back of Indian Elections. Nifty went from 6300 to 9100. Earnings did not deliver.
- The Rally which started in March-May 2014 lasted for a year, very similar to the current move.
- In 2014-2015 - Nifty at 8700- 9100 was higher than the 2008 highs of 6300. At the same time BSE Smallcap could only go back to 2010 highs.
- Similarly In 2020-2021. Nifty at 14500-15500 is higher than the 2018-2020 highs of 11100-12430. Also a clear higher top and higher bottom formation since March 2020. At the same time BSE Smallcap has only gone back to the highs of 2018.
- BSE Smallcap continued to outperform in 2015 even with a declining Nifty and there were very strong stock specific/sector specific moves. Sectors like Chemicals/Textiles and stock specific cos ( some of the cos we covered ) did really well.
- The Smallcap Divergence became extreme in end of 2015 and we saw a good correction in 2016. That was the next big opportunity.
- We do not expect a similar dip like 2016 but could see an opposite of it after this time correction.
- Post 2015 the earnings did not deliver. Given the low base and post second wave we could expect earnings to deliver between 2021-2023.
- Stock Specific and Sector Specific Moves can continue over the next 1 year.
- We may not see a similar crack like what happened in 2016.
- For the medium term we watch for 14750-14900 and 13600-13800 as trend change zones.
- No two market cycles are exact but at times can be somewhat similar.
- After a strong one year rally we are now into a consolidation and correction zone.
- A good strategy would be to focus on Stocks and Sectors rather than the Market Trend.
- A few sectors/stocks can go up 50-100% with Nifty being in a 5-10% range.
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