Nifty May Fizzle Near 24,900, Says Analyst
The Indian stock market has been on a rollercoaster ride in recent months, with the Nifty 50 index experiencing a significant surge in June and July. However, according to Aditya Thukral, a renowned analyst, the market may be about to fizzle out near the 24,900 mark. In a recent interview, Thukral warned that the short-term trend is likely to turn bearish, with a potential downside target of 24,200.
Thukral’s bearish call is based on the Nifty index breaching its trend line in July, a move that indicates a potential reversal in the market’s momentum. While the index has rebounded somewhat since then, Thukral believes that the bounce is likely to be short-lived and that the market will eventually succumb to the downward pressure.
One of the key indicators that Thukral is watching is the Nifty’s relative strength index (RSI), which has been trending downward in recent weeks. The RSI measures the speed and change of price movements, and a reading below 30 is often seen as a sign of a potential trend reversal. Currently, the Nifty’s RSI is hovering around 28, which suggests that the market is oversold and due for a correction.
Another reason why Thukral is bearish on the market is the lack of institutional buying. Historically, institutional investors such as pension funds and mutual funds have played a key role in driving market trends. However, in recent months, they have been net sellers, which has contributed to the market’s volatility.
Thukral also points to the market’s valuation as a reason for his bearish call. The Nifty’s price-to-earnings (P/E) ratio is currently around 22, which is significantly higher than its historical average. While a high P/E ratio can be justified in a growing economy, Thukral believes that it is unwarranted in the current environment, where the economy is facing significant headwinds.
So, what does this mean for retail traders? According to Thukral, they may want to consider shorting the market near the 24,950-25,000 level, with a stop-loss at 25,350. This strategy involves betting against the market, with the aim of profiting from a potential decline in the Nifty’s price. However, it’s essential to note that shorting is a high-risk strategy and should only be attempted by experienced traders who have a solid understanding of the markets.
Thukral’s bearish call is not the only warning sign for the Nifty. Other analysts have also pointed to the market’s overvaluation, as well as the potential impact of global events such as the US-China trade war and the ongoing COVID-19 pandemic.
In conclusion, while the Nifty has been on a tear in recent months, Aditya Thukral’s bearish call suggests that the market may be due for a correction. Retail traders who are considering entering the market may want to exercise caution and consider shorting the market near the 24,950-25,000 level. However, it’s essential to remember that the markets are inherently unpredictable, and there is always a risk of unexpected events that can impact the market’s trajectory.
