Nifty Hits All-Time High
The Nifty increased 36 percent, 23 percent, and 10 percent from their respective previous bottoms for the heights reached in October 2021, December 2022, and June 2023, respectively. This indicates that gains prior to each individual peak are eroding over time.
Because of the Nifty’s difficulty regaining its peak, traders are hesitant about how it will perform going forward.
On June 28, at 10:15 a.m., the Nifty 50 index was trading at 18,888.35, up 0.38 percent from the previous close, and reached an intraday high of 18,908.15.
“I don’t see any new leg of the market rally,” declared Rajesh Srivastava, a derivative trader based in Bengaluru, who anticipates the Nifty will not move much beyond 19,000 level. “From now on, a trader must focus exclusively on stocks.”
Despite reaching an all-time high, selling pressure on Bank Nifty at the peak makes it appear weaker than the Nifty at the moment. The index will see pressure as a result of the Nifty’s significant weighting of bank equities, he predicted.
In the past 20 months, the Nifty50 has completely retraced its steps. From 18,477 in October 2021 to an intraday high of 18,888 in December 2022 and then the continuing surge, it had soared.
Once more, successive rallies from the bottom to all-time high levels are becoming shorter.
Analysts and traders noted that this is a sign of supply being near record high levels. Additionally, some people think that the market’s most recent record high, which occurred in December 2022, wasn’t a true breakout but rather a botched breakout.
Before making any trades, independent technical expert Milan Vaishnav stated, “I will wait for a convincing breakout – next day’s low after hitting all-time high being higher than the previous day’s close.” “I anticipate Nifty to rise after a breakout occurs.”
He continued by pointing out the uninspiring overall market breadth, the precariously low VIX levels that are inconsistent with previous breakouts and indicate a sense of complacency in the market, and the lack of participation from banking and financial stocks as reasons why the likelihood of a clear breakout is lower.
Volatility has historically been high when the market was nearing all-time highs or breaking out. The momentum of the market is not encouraging with the India VIX at 11.38.
Selloff in broader market?
The midcap and smallcap indexes have surpassed the benchmark when compared to the December 2022 high, even if the benchmark index has recaptured the summit once more in June 2023. In other words, when the Nifty was attempting to retake a peak, larger markets soared to uncharted heights. Since December 2022, the Nifty Midcap 100 and the Nifty Smallcap 100 have increased by 8% and 6%, respectively.
Srivastava anticipates a rush to book profits on stocks in the larger market. Others, like Vaishnav, urge traders to stay away from stocks that are “too hot” since some profit-taking is likely to occur. By “too hot,” they mean equities that have witnessed a lot of buying recently.
Additionally, some mutual fund managers are acting in a way that analysts see as an indication of market froth. For instance, Tata Mutual Fund has stated that beginning of July 1 it will no longer take lump sum payments and will only accept investments into the Tata Small Cap (TSC) Fund.
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