Index Finding Strength At 15K Levels, May Be Preparing For A Fresh Up Move
The NIFTY continued to be under pressure for the better part of June, on the back of a major sell-off in global equities, rise in crude oil prices and rate hikes by central banks. A late surge towards the end of the month saw the index racing past the 16K mark.
FII’s continued to sell in June, with net outflows crossing 50K crore within the month. Domestic Institutional Investors continued to counter it with equally strong inflows. However, the trend appears to be reversing in July. In the near term, a medley of factors will continue to influence equities – particularly crude prices, inflation and retail sentiment.
With valuations moderating significantly from last year’s astronomical highs, the long-term view on equity continues to remain positive due to favourable demographics, healthy tax collections and strong government reforms.
On technicals, the NIFTY is very interestingly poised indeed. We see the index finding strength at the middle Bollinger Band (20 month moving average line) after sliding off from the upper band in October ‘21. If it continues to settle at these levels, we may well see a strong up move in the next wave. On the weekly chart, the broad trend continues to be bearish but there seems to be significant buying activity whenever the index breaks below the lower Bollinger Band.
The level of 16,550 remains critical. If the index decisively breaks past that level, we can say conclusively that the current bearish wave is on its last legs and we may well see the index making fresh highs in its next wave. Overall, a good time to be overweight equities depending upon your goals and risk tolerance.
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