Nifty Technical Outlook: An Extended Time Correction Is On The Cards

The markets have been frustratingly directionless since the start of the year now - and we're getting into the 6th calendar month. In the absence of any concrete fundamental momentum drivers, the bellwether index has been trapped in a narrow band between 10,000 and 11,000 since the third week of January, much to the consternation of investors who had grown used to achieving linear short term returns in 2017.

This week, the index made an extremely volatile opening - at one stage looking like it would tear past the 10,800 mark in a hurry, before falling to ~10,670 levels as I write this.

The curve of the upper Bollinger Band suggests that the next resistance is, unfortunately for the bulls, trending downwards - meaning that the momentum is favouring the bears at the moment. However, as long as the index stays above the 10,500 mark, a meandering move towards 11,000 is still the most likely medium-term trend.


Investors looking to book profits and de-risk their portfolios should ideally sit tight for another 4-6 weeks. Post that, a minimum 50% allocation to a well planned portfolio of bonds and debt funds is advised for the next year or so, as an extended time correction is on the cards.