Massive Story: Wanting past the bellwethers

The bellwether Sensex and Nifty 50 indices have begun yr 2023 on a weak word. Main Asian indices such because the Nikkei 225 and Shanghai Composite are up over 5 and seven per cent (year-to-date) respectively. Within the US, the Dow Jones Industrial common has recovered all its loss made earlier this yr and is up simply over a per cent now. Germany’s DAX has surged over 12 per cent thus far this yr. In distinction, the Sensex and Nifty are down 1.7-2.8 per cent.

Whereas yet another leg of down-move can’t be dominated out, the sturdy restoration within the Sensex and Nifty over the past couple of weeks has given some reduction.  The time appears to be like ripe for buyers to begin coming into the markets from a long-term perspective.

We use this chance to evaluate indices past the bellwethers, utilizing technical evaluation, and see which of them make for attention-grabbing investments at this juncture. Traders have choices to take publicity to a few of these indices via index funds and ETFs.

Nifty 100: Purchase now and accumulate on dips

The Nifty 100 (17,414.65) index made a brand new excessive of 19,039.40 in December final yr. Thereafter, the index has been trending downwards. The downtrend continues to be intact. Speedy resistance is at 17,450. Above that 17,570 and 17,830 are the subsequent essential resistances. So broadly, so long as the Nifty 100 index stays under 18,000, the downtrend will proceed to stay intact.

Outlook

Yet another leg of fall from any of the resistances talked about above can take the index all the way down to 16,350 and even 16,000. This fall can occur on this quarter (April-June). However such a fall will probably be a superb alternative to purchase the Nifty 100 index. The extent of 16,000 is an important trendline assist. A powerful set off is perhaps wanted to interrupt this assist.

We count on the index to maintain above 16,000. A recent rally thereafter could have the potential to take the Nifty 100 index as much as 19,000-19,200 by the primary or second quarter subsequent yr. From a really long-term perspective, an eventual break above 19,200 will pave the way in which for a check of twenty-two,000 and better ranges, going ahead.

To keep away from the autumn to 16,000, the index has to make a robust shut above 17,750 in April. Thereafter a robust follow-through rise above 18,000 can take it right away in direction of 19,000-19,200 a lot faster.

Technique

Lengthy-term buyers can get into this index in tranches. Since there may be room for yet another leg of fall, purchase 30 per cent of the meant quantity at present ranges. Purchase one other 50 per cent at 16,400 and the steadiness 20 per cent at 16,150. In case an increase to 17,750 occurs in April, then purchase the steadiness 70 per cent at 17,850.

Nifty 500: Purchase on dips

The Nifty 500 (14,759.20) index is dealing with sturdy resistance at 16,000. The quarterly candles present that because the fourth quarter of 2021, the index has been struggling to breach the 16,000-mark. The index made a excessive of 16,041.65 in December final yr and has been coming down since then. Speedy resistance is within the 14,800-15,000 area. Above that, 15,200-15,400 is the subsequent key resistance zone. So long as the index stays under 15,400, the downtrend will stay intact.

Outlook

Nifty 500 index has room to fall additional. It may possibly check the intermediate assist at 14,200-14,170 once more. A break under 14,170 can drag the index all the way down to 13,500 and even 13,000 within the worst case. This fall can occur both on this quarter (April-June) or within the subsequent. Nifty 500 index can discover a backside anyplace within the 13,500-13,000 area. A recent rally thereafter can take the index again in direction of 16,000.

A decisive month-to-month shut above 16,000 will increase the bullish momentum. Such a break will pave the way in which for a recent rise to 19,000 and better ranges over the long run.

Technique

Traders ought to wait to purchase this index. Purchase 20 per cent of the meant quantity at 14,100. One other 60 per cent may be purchased at 13,600. The steadiness 20 per cent may be deployed at 13,200.

Nifty Subsequent 50: Purchase now and accumulate on dips

The Nifty Subsequent 50 (38,187.05) made a excessive of 45,509 in September final yr and has come off sharply from there. The value motion on the long-term charts signifies that the index had did not breach 44,000 decisively in its a number of makes an attempt made since October 2021. The area between 44,500 and 45,500 is a robust resistance zone. The index has to see a sustained break above 45,500 to carry again the bullish momentum.

Outlook

The pattern has been down since September final yr. Nonetheless, there may be not a lot room left on the draw back. The value motion on the weekly chart provides an preliminary signal of a base formation above 37,000. So, there’s a probability for an increase to 39,500-40,000 within the quick time period. However whether or not that will probably be a pattern reversal or only a corrective bounce shouldn’t be going to be clear in the mean time.

Nonetheless, on the month-to-month chart, there may be nonetheless little room left on the draw back. Helps are at 36,150 and 35,500. Yet another leg of fall to 36,150 or 35,500 can’t be dominated out — both from right here itself or after a corrective rise to 40,000. Nonetheless, a fall past 35,500 is much less probably.

So, a recent rally from both 36,150 or 35,500 can take the Nifty Subsequent 50 index up in direction of 45,500 once more by the ultimate quarter of this yr. A decisive break above 45,500 will then open doorways for the Nifty Subsequent 50 index to focus on 54,000-56,000 over the long run.

Technique

There’s not a lot room left on the draw back from right here. Additionally, there’s a signal of a base formation. So, we propose  shopping for the Nifty Subsequent 50 index at present ranges. Purchase 70 per cent of the meant quantity now. The steadiness 30 per cent may be purchased at 36,250.

Nifty SmallCap 250 and Nifty MidCap 150 are the opposite two indices that we thought-about for our research. However since these two indices have restricted historic information, to do an in depth evaluation, now we have taken the BSE MidCap and BSE SmallCap indices as a proxy for Nifty MidCap 150 and Nifty SmallCap 250 indices respectively. Directionally they transfer collectively. So, buyers can make an observation of the degrees given under for the BSE MidCap and BSE SmallCap indices and correspondingly spend money on the Nifty MidCap 150 and Nifty SmallCap 250.

BSE MidCap: Purchase now

The BSE MidCap (24,351.06) index made a low of 23,356.61 final month and has risen again nicely from there. This upmove is important because it has occurred from round an essential assist stage. Nonetheless, there isn’t a affirmation but on a robust pattern reversal. So, we should wait and watch the value motion within the coming weeks to get readability on that.

Outlook

Robust helps are at 23,000 and 22,700. So, there are good possibilities that the BSE MidCap index may have shaped a backside already. However, to get an preliminary affirmation on that, the index has to rise previous 25,000 decisively from right here. That may enhance the probabilities for the index to check the essential resistance stage of 26,500.

A powerful month-to-month shut above 26,500 will strengthen the bullish momentum. In that case, the BSE MidCap index can goal 31,500-32,000 over the long run.

Alternatively, failure to breach 25,000 from right here can drag the index all the way down to 23,500-23,000 once more. Nonetheless, as talked about above, 23,000 and 22,700 are sturdy helps. So, a fall past 22,700 is much less possible.

Technique

The BSE MidCap index is an efficient purchase at present ranges itself. Traders can deploy 75 per cent of the meant quantity at present ranges. The steadiness 25 per cent may be purchased both at 25,300 or at 23,200, whichever occurs first.

BSE SmallCap index: Purchase in tranches

The BSE SmallCap (27,725.34) made a low of 26,120.32 final month and has risen again very nicely. This bounce has occurred from slightly below a key trendline assist stage of 26,650. This provides some hope that the downtrend that was in place since December final yr might need ended. Nonetheless, a robust follow-through rise from present ranges is required to verify the identical.

Outlook

An important near-term resistance is at 28,600. If the index makes a robust shut above this, it is going to then strengthen the case for a pattern reversal. In that case, an increase to 29,600 and even 30,400 may be seen thereafter.

The extent of 30,400 would be the subsequent key resistance to observe. The rise above 28,600 will enhance the possibilities of the index breaching 30,400 as nicely. A powerful follow-through rise above 30,400 will then see the BSE SmallCap index focusing on 34,500-35,500 over the long run.

Nonetheless, extra warning is required in case the index fails to interrupt 28,600 instantly. That may drag the index down to check 26,650 — the essential pattern line assist. A powerful break under 26,500 will enhance the promoting strain and will probably be very bearish. Such a break will enhance the hazard of the BSE SmallCap index tumbling in direction of 24,000, going ahead.

However, for such a fall to occur, some new and a robust unfavorable set off is required. In the mean time, all of the unfavorable information — such because the rate of interest hikes, international slowdown, recession within the US — is already factored out there. So, as such, we count on the current bounce within the BSE SmallCap index to maintain and transfer increased.

Technique

Because the probability of a steeper fall to 24,000 continues to be a menace, we propose buyers purchase the BSE SmallCap index in tranches. Traders should buy 60 per cent of the meant quantity at present ranges. The steadiness 40 per cent may be purchased at 29,100. In case the index reverses down from round 28,600 and breaks under 26,500, then buyers have to attend for the extent of 24,200 to deploy the steadiness 40 per cent.