Deciphering Nifty50’s Trajectory: Insights, Analysis, and Strategies for the Road Ahead
Wondering about Nifty50’s trajectory in the latter half of 2021? Technical pundits foresee a tumultuous journey towards the 17,000 mark.
Analysts project the Nifty50’s next objective to range between 16,800 and 17,000 within the next 6 to 12 months. However, they caution against potential volatility, given that much of the positive developments, such as vaccination drives, robust earnings, and economic bounce-back, have already been factored into the market.
Despite the seismic impact of the pandemic’s second wave, the Nifty50 continues its remarkable ascent to unprecedented heights. Yet, there are murmurs among the bulls of a slowdown, hinting at possible market turbulence ahead.
Having surged over 13% year-to-date and a staggering 50% over the past year, the index peaked at 15,915 on June 28, 2021.
Should the current momentum persist, analysts predict a target range of 16,800 to 17,000 within the next 6 to 12 months. However, they emphasize that this journey won’t be a straightforward one, given the already discounted positive news.
While specific stocks may witness significant action, traders are advised to exercise caution, avoiding excessive leverage, and opting for quality stocks across market capitalization.
From a technical standpoint, the Nifty50 has successfully broken out from its previous all-time high of 15,431 in May 2021, forming a robust bullish candle.
The Relative Strength Index (RSI) has maintained a steady course since the year’s onset, now poised to breach the overbought zone, signaling a potential resurgence in bullish momentum.
Furthermore, the index continues to trade above key moving averages (50, 100, and 200 SMA), indicating short-term strength.
Recent market activity has seen sustained buying, culminating in a higher high-low formation in June, followed by a consolidation phase within the 15,600-15,900 range over the past 3-4 weeks.
Rajesh Palviya, VP of Technical & Derivative Research at Axis Securities, notes, “Nifty has been charting a path of higher highs and higher lows since April 2021. Once the index breaches the crucial resistance at 15,900 on a closing basis, we anticipate a rally towards 16,300-16,500 levels in the short term.”
He adds, “Maintaining support levels between 15,350 to 15,450 over the next 3-6 months is critical. As long as Nifty remains above the 15,000 mark on a weekly closing basis, the bullish trend is expected to persist.”
Market breadth has significantly improved, with midcap and small-cap indices also demonstrating bullish momentum, indicative of an extended uptrend in the broader market.
Key sectors such as IT, Metal, Cement, Banking & Financials, and Capital Goods are also displaying bullish tendencies, further reinforcing optimism for the market’s trajectory.
Several technical experts share their insights on Nifty50’s outlook for the next 6-12 months:
Mehul Kothari, AVP of Technical Research at AnandRathi, observes, “Despite reaching another lifetime high, the Nifty50 seems to be dragging itself, suggesting a waning bullish fervor. While technical targets hint at potential upside towards 16,200-16,400, caution is warranted.”
Pritesh Mehta, Lead Technical Analyst at YES SECURITIES, emphasizes the importance of a decisive breakthrough above resistance points for sustained momentum. He notes, “While the index struggles to breach upside barriers, robust support levels have prevented significant downside, indicating underlying strength.”
Dharmesh Shah, Head of Technical at ICICI Direct, underscores the broader market’s structural bullish trend, projecting a milestone of 17,300 for the Nifty over the next 9-12 months. He advises investors to capitalize on intermittent volatility to build quality portfolios across large-cap and midcap segments.