Nifty at 15,500? PhillipCapital sees 6,500-point correction in worst-case scenario; here’s why
In the worst-case scenario, Nifty could test 16,000-15,500 levels, a 6,523 points or 30% fall. In this case, the timewise correction can last for a maximum of 6-7 quarters. The brokerage house sees signs of exhaustion noting that the markets remain 'highly overbought' on a long-term time frame.
's euphoric rally is staring at a sharp decline and the index could plunge to 18,550 in what could be a timewise correction that may last for a minimum of three quarters, according to estimates. This is a 3,470-points or nearly 16% fall from the Friday closing price of 22,023.In the worst-case scenario, Nifty may test levels of 16,000-15,500, a whopping 6,523 points or 30% fall. In this case, the timewise correction could last for a maximum of 6-7 quarters.
PhillipCapital sees signs of exhaustion noting that the markets remain 'highly overbought' on a long-term time frame.
By calling for a correction in these 'euphoric markets', the brokerage house is taking a trend reversal call in the medium term. Should the analysis go wrong, Nifty could hit levels between 27,000 to 30,000. For Nifty to test these levels, mid and smallcaps will have to outperform their largecap peers and move up by 35%-40% from current levels. "The probability of that occurring is very low on an immediate basis," the brokerage note said.
The 10-year bull run in markets which started in 2014 has given 3.4X returns with Nifty rallying from 6,500 to 22,500 levels and the headline index is presently in a greed cycle, Phillip opined, while believing the broader markets to underperform the largecaps.
Key Takeaways
-- The trendline resistance of 7 years between 2007-2013 lying at 6,500 was finally breached by Nifty in 2014 paving the way for the current bull run.-- In the long-term, Nifty has entered the cycle of 'Greed' and 'Euphoria' as indicated by the which is getting steeper as the bull run progresses.
-- At 22,023, Nifty traded at an important trendline resistance on quarterly charts with highly overbought momentum oscillators.
-- The levels of 18,750–18,550 will act as a key support for the Nifty in the coming days.
-- NSE Midcap 100 is trading at an important channel resistance with a highly overbought oscillator. It is heading towards 40,000 -38,000 levels which is an important channel support.
-- NSE Smallcap 100 is trading at an important channel resistance with a highly overbought oscillator. It is heading towards 11,400-10,800 levels, an important channel support.
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(Disclaimer: Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Source: Stocks-Markets-Economic Times
