- The Nifty 50 has gapped higher to kick off the day on Wednesday, showing strength yet again.
- India has outperformed most of the major markets that I pay attention to, and now it looks like it’s ready to do even more of the same.
- If you look at the chart, you can make out a bullish flag and it does suggest that perhaps we could be seeing a move to the ₹20,000 level before it’s all said and done.
This could make a certain amount of sense because quite frankly India has bucked the trend all along. While the rest of the world was struggling, the Indian stock exchange solve massive inflows. I think at this point traders are starting to bet on the idea of manufacturing leaving China and heading toward India, as well as the fact that amongst major Asian economies, India stands as a giant. It’s been open this whole time, unlike massive parts of China that keep closing.
Looking to Buy the Dip
On pullbacks, I like the idea of buying the Nifty 50, especially near the 50-Day EMA, currently sitting at the ₹18,100 level. The ₹18,000 level is a large, round, psychologically significant figure that will attract a certain amount of tension, so would not surprise me at all to see those who missed out on the move higher try to get involved. It’s an obvious level going back quite some ways, and you could even make an argument that we had formed an inverted head and shoulders that used that level as the neckline.
Even if we were to break down below that level, I think the 200-Day EMA could come into the picture to pick things up, but it’s all the way down at the ₹17,400 level. I don’t see that happening, but it is a possibility. Quite frankly, if the Nifty 50 starts to break down significantly, I anticipate that I will probably be shorting other indices that are much more vulnerable than this one. With that being said, I still look at this as a “buy only” type of situation, and I look at dips as value propositions. The market certainly seems as if it’s going to try to get to ₹20,000 sooner or later, but that doesn’t mean that it will be quick, or even this year.
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