Indian Equity Markets To Remain Bullish In The Medium Term: InCred Alternatives

The big trendline resistance of the last 1-year consolidation that lies around 17850 was touched on Tues 30th Aug and this happening on a monthly closing is significant, says Rishi Kohli, CIO, Hedge Fund Strategies, InCred Alternatives.

"The fact that the BankNifty index had broken above a similar trendline a month back and the midcap index has also broken above a similar trendline resistance a couple of weeks back and taken support there in the last 2 weeks' decline and then bounced back strongly this week corroborates the Medium-term Bullishness In The Indian Equity Markets," he said in a note.

According to Kohli, in fact, the mid-cap index had retraced only 38% of the rally from Mar'20 to Oct'21 in the last year's consolidation and then broken above the channel which is very bullish.

"The ratio chart of a mid-cap index to large-cap Nifty index has also given a medium-term breakout which is supportive of the bullishness in broader markets and also points to near-term outperformance of mid-caps to large-caps.

Another interesting point is that ratio of Nifty to S&P has also given a channel breakout on monthly charts which means India should outperform US in the medium-term. The downward sloping channel Nifty futures had formed since the highs around 18k on 18th Aug was broken today intra-day when it crossed 17650 giving a channel target of 18100 levels and Nifty continued with further strength intra-day along with indicators on hourly timeframe like MACD turning positive which corroborated the channel breakout," he states.