Chartist Talks | Nifty set to resume bull market, reach new highs; says Indiacharts’ Rohit Srivastava | CPT PPP Coverage

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Rohit Srivastava, Founder and Strategist at Indiacharts.com, suggests in an interview with Moneycontrol that the Nifty may be poised to resume its bull market and reach new highs. This potential scenario is based on the Nifty’s recent support at the 20-week moving average, the formation of a Hammer candlestick pattern on weekly charts, and a bullish reversal in the S&P 500 following a period of extreme negative sentiment.

A market veteran with nearly 30 years of experience, Srivastava says even if midcaps do rally, he thinks that it is time for largecaps to do better than midcaps in the weeks ahead.

At some time in the future another correction in midcaps may be expected which finally relieves the mid-cap and small-cap index of the overbought condition, he feels.

Q: Do you think the Nifty50 will resume its upward journey towards its record high again in coming days, considering the chart structure?

Technically the market has been through a long consolidation since it topped in August. The two-month consolidation maybe considered as complete as Nifty has managed to take support on the 20-WMA at 19,314 lakh week, and that too with a Hammer candlestick pattern on weekly charts, which shows buying at lower levels coming in.

This combined with a bullish reversal in the S&P 500 after sentiment hit an extreme low point is a setup for the Nifty resume the bull market and go back to new highs.

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Q: Do you see similar kind of trend in the Bank Nifty too?

Bank Nifty has lagged the Nifty but it cannot be far behind. Having said that Bank Nifty did not close the week positive or form any candle pattern like in the Nifty to spur further confidence. So I would wait a while longer before confirming that Bank Nifty is set for gains.

Q: Do you expect some correction and consolidation in PSU Bank index in coming weeks?

The daily RMI [Rohit Momentum Indicator] for the PSU bank index is in sell mode which means that short term at least there can be a pullback in the sector. We need to watch if the 40-DMA (day moving average) holds or not before deciding on the downside risk. For now, it may just underperform the market in the short term.

Also read: What should be your strategy for Bajaj Finance, PCBL, MCX India on Today?

Q: Do you think the Nifty Realty index seems ready for next upward journey? Do you see Cup and Handle kind of pattern formation on monthly charts?

The Realty index is making a come-back in wave 3 long term. A Cup and Handle pattern on monthly charts is not hard to imagine and we are breaking out of the handle.

Q: Do you expect the Nifty Mid-cap and Small-cap indices to resume northward journey again in coming days?

The midcap and small-cap indices were extremely overbought in August and all we got was a one-day knee-jerk reaction from there. The weekly RSI (relative strength index) since then came down from 88 to 74 but is still in overbought territory.

Also read: Corporate earnings growth for Q2FY24 to be up to 24% YoY led by margin recovery, says Shailendra Kumar of Narnolia

For this reason, even if midcaps do rally I think that it is time for largecaps to do better than midcaps in the weeks ahead.

At some time in the future another correction in midcaps may be expected which finally relieves the mid-cap and small-cap index of the overbought condition. That will bring more comfort to the longer-term trend. In the short term though the correction in mid and small caps is over and they are not falling anymore.

Q: Any sector that one should focus on for October….

The dollar appears to be peaking this week as it closed down after 14 weeks and a falling dollar is often a good signal for commodities. With that in mind, I would focus on the Nifty Metal index and metal stocks for giving a positive performance in October.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.