Nifty Technical Outlook: Right Time For Investors To Rebalance Portfolio

The NIFTY was volatile last week, zigging and zagging wildly only to eventually close 40 odd points higher than its previous closing. Although this represents the 4th straight week of gains, the indecision is quite apparent even to the untrained eye, as bulls and bears both grapple for reasons to hold steadfastly to their points of view!

Q1 earnings have been fairly robust until now. If not for a loss by India’s lending behemoth SBI, Nifty 50 companies would have met the revised average estimate in the quarter ended June. Needless to say, the overoptimistic FY-start analyst estimates (a quarterly EPS projection of 134 was the consensus on April 1, was revised to roughly 122 on average, at the start of the earnings season) were missed, with the final number coming in at 114.

Although the NIFTY has been holding its own for the past 4 weeks, indicators suggest that the burgeoning overbought momentum is likely to take its toll at some stage quite soon. The broader momentum may have turned moderately bullish, but this would be an opportune time for investors to rebalance their portfolios by taking profits and moving a certain percentage (depending upon risk appetite) to short-medium duration debt funds. The upside appears severely capped at this stage, with the possibilities of a retracement imminent.



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