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Nifty to challenge life time high!

ICICIdirect Research 06 Mar 2023 DISCLAIMER

What's Buzzing 

The domestic markets have corrected 9% over past three months in the backdrop of resurfaced anxiety around aggressive Fed rate hike. At the current juncture, many participants are puzzled with the question of what lies ahead? Will Nifty retest life time highs? 

Context: 

In a secular bull market, a secondary correction is an integral part of the primary bull trend. We believe Indian benchmarks are undergoing higher base formation over the past three months after reversing CY22 decline of 18% and recording new highs in December 2022. While the index has factored in various headwinds in the process, the current context is very similar to that of CY13, CY16 and CY18 phase. In each of these identical instances, higher base formation consumed around three to four months and retraced preceding up move by around 50-60%, then followed by index challenging the new highs over the next quarter.

 


Our Perspective: 

In the current scenario, the index has already retraced 44% of prior up (15183-18887) move over three-month period and is approaching price/time wise maturity of correction. We expect the index to form a major bottom in the range of 17200-16800 and head towards lifetime highs over the next three to four months. However, the move towards lifetime high would not be in a linear manner. Thus, dips from here on should be capitalised on to accumulate quality stocks to ride the next leg of the up move. Sectorally, we expect BFSI, IT, Capital Goods, Auto, PSU to lead the index higher.

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