NIFTY closed for the first time @ record highs 7795 odd levels. The bottoming of economic cycle along with the sync of change in political cycle has bought in stellar fund flows into Indian equities and NIFTY 50 market cap has to 90 lakh crore till date. TCS crossing the 5 lakh crore market cap today.
The Index (NIFTY) has given 20+ % returns this year and has beaten the emerging markets by performing far ahead of its peers.
The media and news papers are flooded with news that domestic investors are coming back after the clarity of budget. The question is this the right time to enter the markets ?
Well the structure bull run or cycle is intact in Indian equities and the era has just begun. But for a trader or a retail short to medium term investor timing is vital and bearing of risk is minimum. So objectivity becomes important based on individual risk appetite consideration.
Coming to the point what is in store from here on at life time highs now. Will rally going to continue further or fizzle out ?
Technically NIFTY is in the process of forming an expanding triangle now nearing the channel top near 7880 - 7890 as shown in chart below.
NIFTY Daily Chart
NIFTY also near the end of the Wave 3 which has started the impulsive rally from 5118. The Wave 3 is 1.618 times wave 1 from 4531 to 6229 can terminate around 7866. So a flat Wave 4 correction (consolidation) can be expected which can at least retrace 38.2% of the Wave 3 once terminated.
Thus, technically its not the time for celebration rather caution can be planned as an healthy 8 - 10% correction can be expected in the Index as broader markets (mid & small caps) are under performing and Adv/Decline is also reducing day-by-day indicating lacking of strength in the rally led by only few large cap stocks.
Raju V Angadi
Equity Research Analyst
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Disclaimer: This is just an view based on the research of individual for educational purpose. So kindly trade along with the consultation of your financial adviser, market trends, price action and own risk appetite considered while investing or trading in markets
