Vijay Kumar Gaba: Nifty: Financial outperformance may peak soon

Monday, April 25, 2016

Nifty: Financial outperformance may peak soon

Thought for the day

"God has cared for these trees, saved them from drought, disease, avalanches, and a thousand tempests and floods. But he cannot save them from fools."

—John Muir (American, 1838-1914)

Word for the day

Hoi Polloi (Plural Noun)

The common people; the masses (often preceded by the).

(Source: Dictionary.com)

Malice towards none

Is it immoral to be rich in India?

First random thought this morning

Regardless of the severe drought and water shortages in many parts of the country, so far there is no water cut or shortage at my place.

We have however pledged to immediately reduce our water consumption by 40% permanently. My children resisted initially, but are even more enthusiastically committed to the pledge now.

Nifty: Financial outperformance may peak soon

Last month, I had argued (see here) that financial will lead Nifty higher. I also argued that Nifty faces Nifty faces a strong resistance in 7925-7960 range in the near term. A monthly close above this range will set Nifty on course for new highs. A sustained monthly close above 7960 shall see Nifty testing its new cyclical peak of 13200 in the next following 39 months. (see here). So far the markets have been obliging by playing to the script.

A monthly and weekly close above 7960 this week shall set the path for NIFTY to scale much higher levels by summer 2019.

Three things are noteworthy from the weekly charts.

(a) Bank Nifty has completed a bullish reverse head & shoulder pattern, and looks set to rise to its next resistance range of 17300-17350, with some minor hurdles at 17040 level.

(b) Nifty faces some resistance around current market level and might even see some retracement. But the path to 8260-8310 range is clear and may be tested in next 5-6weeks.

(c) The leadership of Bank Nifty is fading and may peak in next 3weeks. The new leadership may emerge from IT and Pharma space.