Nifty stuck in time loop since last 6 quarters. Will we see a big breakout in 2023?

NEW DELHI: Navigating the opposing headwinds and tailwinds of a strong domestic economy in a worrisome global macro backdrop, Nifty is stuck in a time loop for the last 6 quarters. A study of the quarterly charts shows that India's heartbeat index has been trading in a broad consolidation range for the last 18 months. From September 2021 closing of 17,618.15, Nifty is up only around 3% now.

“The pattern we are seeing on both the Nifty and NSE500 charts is unique. It calls for a very big trend on either side. A big event can bring a big trend and it can be related to the budget or an international event. 2023 is also a pre-election year. There can be a very big breakout but then the market always surprises,” Rohan Mehta, CEO & Fund Manager, Turtle Wealth Management, said.


Nifty had topped out in October 2021 at around 18,600 level after which it had a multi-month correction that developed in a downward sloping channel. The index received support near the lower channel line in June-July 2022 and started moving higher.

In October this year, the index broke out of the channel on the upside and went on to register a new all time high of 18,887 this month. Since then, Nifty has seen a short term correction in the last few weeks.

“The overall structure shows that the benchmark index has given a multi month breakout and has resumed its larger uptrend. So we are likely to see a positive trajectory in the next few months where the index can surpass the 19,000 mark,” said Gaurav Ratnaparkhi, Head of Technical Research, at Sharekhan by BNP Paribas.

On the quarterly charts, Nifty has formed a flag formation which technical analysts say indicates the continuation of the prior trend.

"On the monthly chart, the index has witnessed a bullish breakout above its consolidation range and prices are sustaining above its trend line support. The monthly strength indicator RSI (14) and momentum oscillator Stochastic have both readings in a positive terrain and are above their respective reference lines indicating positive bias in a medium to long term," Rohan Patil, Technical Analyst, Samco Securities said.

The chart pattern suggests that if Nifty crosses and sustains above 18,900 levels it may witness buying which can lead the index towards 20,000-20,400 levels. However, if the index breaks below 17,500 level, it can witness selling which may take the index towards 17,100-16,800 levels, he said.

The Outperformers

While Nifty has been range-bound in the last one-and-a-half years, about half of the index constituents have outperformed during the period. Since Sep 30, Adani Enterprises has gained around 157%, followed by M&M (54%), ITC (41%), SBI (33%) and ICICI Bank (29%).

Other gainers include L&T, Sun Pharma, Axis Bank, Bharti Airtel, Coal India, Tata Motors, Titan, Eicher Motors, JSW Steel, Maruti Suzuki and Power Grid.

A poll of 21 analysts by ETMarkets shows that 85% are bullish for the new year 2023 with 46% of them expecting Nifty to end above 20,000 in 2023.

“We believe that 2023 will continue to be a stock picker’s market with good prospects in few pockets like auto, infrastructure, media and pharmaceutical sector,” said Siddhartha Bhaiya, Founder and Fund Manager of Aequitas Investment Consultancy.

(With data inputs from Ritesh Presswala)

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)