Do it yourself

The benchmark Nifty50 (Nifty) has successfully scaled Mount 21k. Nifty has now gained over 23% in the previous nine months and ~16% YTD 2023. Though India is one of the best-performing economies globally, YTD2023 Nifty has underperformed the markets in Japan, Germany, the USA, South Korea, and France – economies struggling to avoid recessions. At 21k, Nifty is now trading 10% higher than its 200-day exponential moving average (200EDAM). In technical studies, 200EDMA is considered one of the most important pivots in studying long-term trends. Several empirical studies have concluded that any significant deviation from 200EDMA is usually not sustainable and the underlying indices tend to converge back to the average line. Observing the Nifty trends over the past 25 years, I find that whenever Nifty has deviated over 10% from its 200EDMA, it always tends to revert to 200EDMA, albeit not always immediately. Once Nifty deviates more than 10% from its 200EDMA, on most occasions, it stret...