Technical talk: Nifty and broader indices are way ahead

On Monday, the Nifty 50 index reached a new all-time high of 22,186.65 where the Sensex is still 600 points away from its all-time high. This surge provided an opportunity for profit-taking, stock rebalancing, and portfolio adjustments. Despite this, the Nifty Bank, a significant driver of the Nifty 50’s upward momentum, is trading within its current range.

However, caution is warranted as recent trading volumes have shown a decline, suggesting weakening buying interest. This could undermine the sustainability of any upward moves from current levels. Additionally, the elevated levels of the INDIA VIX, particularly as elections approach, indicate increased market volatility, potentially leading to adverse downward movements in response to news events.

Nifty 50

Technically, the Nifty 50 is currently trading above its 50-day Exponential Moving Average (EMA), indicating a continuation of the long-term uptrend. However, the pace of this uptrend has slowed, partly due to earnings disappointments among index constituents.

To catalyse the next rally beyond the all-time high, strong support from the Nifty Bank and other broader indices is necessary, alongside sectors such as power, infrastructure, and IT driving economic growth.

Considering alternative technical indicators, the upcoming full moon on February 24th, 2024, may signal a shift in market sentiment, potentially influencing Nifty 50 swings. Recent moon phase analysis indicates a downturn in Nifty 50 performance, which aligns with recent observations on the chart.

Nifty Mid-cap

In the mid-cap segment, the Nifty Mid-cap index mirrors the Nifty 50’s behaviour but with simpler patterns. While it’s retraced from its all-time high, its relative strength against the Nifty 50 remains robust, suggesting continued outperformance.

Key levels on the chart indicate crucial support zones, with any breakdown unlikely to trigger significant corrections due to strong sentiment among investors.

Nifty Small-cap

Similarly, the Nifty small-cap index reflects the broader market sentiment, with the 50-day EMA providing support. Although relative strength against the Nifty 50 is declining, it remains within acceptable bounds, indicating continued resilience.

Conclusion

In conclusion, while the long-term trend remains bullish, short-term movements are expected to be sideways with low trading ranges as the market prepares for pre-election rallies and consolidates recent gains.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. The information is based on various secondary sources on the internet and is subject to change. Please consult with a financial expert before making investment decisions.