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October 2, 2022

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Nifty: Four Factors That Make Nifty Stage 16,600 . Can make technical pullback till

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New Delhi: Despite market sentiment turning bearish, headline equity indices nifty Could soon stage a technical snag from oversold territory. Historically, highly bearish readings of sentiment indicators, based on the percentage of stocks trading above the 200-DMA of the Nifty 500 universe, lead to a 10 per cent pullback rally in the subsequent three months.

In the current scenario, the maturity of 10 per cent will be at 16,700. A report from the domestic brokerage

Said said it expects the index to resolve higher gradually and extend a pullback towards the 16,600 area in the coming months, with strong support placed around the 14,800-14,600 zone, which is the CY-21 rally (13,596 -18,604) is an 80 percent retracement. , at 14,600.

The brokerage cites four main reasons behind the possibility of a technical snag:

1) ICICI Securities said that below 15 per cent of stocks above 200-DMA reflects extreme pessimism in the market which eventually leads to technical shortfall of minimum 10 per cent in subsequent three months.

2) Nifty has already moved closer to oversold readings on weekly momentum oscillators with a fall of 18 per cent from its all-time high of 18,604.45. “weekly” RSI The lowest level (placed at 35) has been reached since May 2020. Historically, a reading of 35 on the weekly RSI has given a good pullback, we expect this momentum to be maintained in the coming months,” the brokerage said.

3) India The emerging market basket continues to outperform in the ongoing correctional phase despite significant selling by FIIs. “In the past one year, while the MSCI EM Index has corrected over 40 per cent from the highs, India has performed relatively better as the benchmark has corrected only 18 per cent,” it said.

4) Fear gauge index India VIX and crude oil prices have cooled from recent highs. According to ICICI Securities, Indian stocks have an inverse relationship with the India VIX, thus, providing impetus for the acceleration of the ongoing pullback.

Based on its technical analysis, the brokerage is optimistic that any further correction in the oversold zone is likely to be short-lived and will set the stage for a technical pullback in the coming weeks.

Even as global cues tracking concerns around rising inflation, rate hikes tend to affect market sentiment, it has encouraged investors to build portfolios by hoarding quality stocks in a staggered manner. It is recommended to use dips for

(Disclaimer: Recommendations, suggestions, views and opinions given by experts are their own. They do not represent whose views) economic times,

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