Hitesh portfolio

Putting up Nifty small cap chart. It’s said that a picture is worth a thousand words.

Just to put in a few numbers. Oct 2021 high was 11876, Jan 2022 high at 12047.(both marked by horizontal lines on chart ) Current levels at 12800. Two important resistances of Oct 2021 and Jan 2022 were crossed in August 2023, so nearly a 2 year consolidation taken out recently.

Since crossing these above mentioned resistances, we have had a stellar rally and it has gone up nearly 7% from breakout level of 12k. Many a times once these multi year resistances are crossed, stocks and indices can go up well beyond the breakout levels, and then there can be a pause, and most commony a retest. From wherever and whenever a correction begins, the key levels to watch would be levels of 12000 (plus or minus 2-5% just to make allowance for whipsaws)

If we put Fibonacci levels to the fall from 12k (top in Jan 2022) to 8 k (bottom in April 2023) in CNX small cap index we get 161.8% levels at 14100, which could be a target. Now this target will not be achieved in a straight line. We might have correction at some point of time, maybe a retest of breakout zones mentioned above and then again a rally towards the Fibonacci target of 14k. This is just a hypothetical scenario based on technical analysis. It may or may not happen…

Coming to the psychological aspect of markets at this current juncture, the most common sentiment I see is skepticism and maybe some optimism. ( Pessimism is a thing of the past) Most of the investors I interact with are questioning the recent rally in the Nifty, and its subsegments like small and midcaps. To me, Euphoria seems to be some distance away. We have seen such euphoria (in the past) at the fag end of rally in 2007, and even in 2017.

Everyone is entitled to have their own views with respect to the markets. As of now above are my views. I can change them as soon as facts/charts change and give indications to the contrary. For me, as long as my techno funda strategy keeps working, I would not worry too much. But as soon as I see a lot of bullish patterns stop playing out and fail, I would be on alert mode for exits.