Nifty may surge to 23,400 before general election outcome, says ICICIdirect; here’s why

To put across its point, ICICIdirect cites data pertaining to the previous three decades wherein each of the seven instances of the general election, Nifty had shown a tendency to bottom out in the first quarter. This was followed by a minimum 14% rally towards the general election outcome, the report said.

Having corrected 5% in January, Nifty followed it up with two months of time correction and it has now approached maturity of price, this brokerage said.

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While CY24 is a Union election year and is expected to have a significant bearing on sentiments in equity markets, benchmark indices have traditionally performed well in election years despite spikes in volatility, ICICIdirect said, highlighting median returns of 17% in the election years.

The projected target for CY24 is 24,800 and ICICIdirect’s advice to investors is to use volatility as a buying opportunity.

The bottom-up chart study of Nifty constituents projects further upsides across multiple sectors as many stocks have approached key supports after healthy retracement and are expected to resume their structural uptrend.

Meanwhile, the global equity markets are also exhibiting robust set-ups and they support further rally over few quarters as domestic markets have the direct correlation with their global peers, ICICIdirect said.

The brokerage noted a 9% correction in the midcap index, already. As the bull market corrections over the past decade have averaged 12%, it provides a favourable risk-to-reward proposition to add quality stocks to a portfolio.

Decoding the technical trends in Nifty Bank, this brokerage said since July 2022, buying demand has emerged in the vicinity of a 52-week EMA on multiple occasions and the price action over two years is in a rising channel.

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