Our top favorite market of last year was the Indian stock market. We wrote extensively about this as readers can see here (one year ago), here (two years ago!) and here (almost 2 years ago). Our forecast was spot-on. The Nifty 50 stock market index representing the largest companies in the Indian stock market was weak in the last couple of months, especially in 2018, so does this mean there is a great buying opportunity in the making or is this the moment to switch from India to another emerging market in 2018?
The global equities sell-off that took place during the first two weeks of Feb 2018 was ‘considered to be unexpected’ because it happened at a time when everything looked great, at least that’s how most financial media represented it. As it always goes, after the facts, many “fundamental reason” were reported in the media to explain the possible reason for such a vicious correction.
InvestingHaven takes the Nifty 50 chart to evaluate the current state of things, in order to get a sense of the future state.
Nifty 50 outlook for 2018 as suggested by the charts
Monthly chart of Nifty 50 shows that the rising pennant consolidation that took 10 years to form since 2008 made the first attempt to break above the resistance and encountered a first rejection.
Monthly chart of Nifty 50 index (March 2018)
The weekly chart of Nifty 50 since 2008 shows a series of Higher High and Higher Low which is the characteristic of typical bull market.
Weekly Chart of Nifty 50 index (March 2018)
Finally, zooming in to the daily chart says a lot about the price movement. Immediate support (pink) sits around 10000 – 10160. Should this level fail there will be support at a lower level (light blue) which is in between 9700 – 9770.
In the near term, we expect more volatility and consolidation to take place until this index finds a solid ground from where it can propel itself higher.
Daily chart of Nifty 50
As far as the long term trend is concerned the bullish outlook for 2018 and beyond remains intact.
It is key for the Indian stock market that the 10625 level in the Nifty 50 index must hold strong in the near future for the bulls to win the ongoing battle. If prices break below 9700, the technical outlook will have to be re-examined.