Unpopular Opinion: Despite All the Euphoria of reversal, NIFTY looks weak!! Trap rally on the cards?

The NIFTY has experienced significant volatility in recent weeks, reaching highs of 26,300 before plummeting by around 2,900 points (an over 11% drop from the peak). However, it has since recovered and is now in positive territory. Domestic investments have played a crucial role in supporting the market amidst heavy selling by foreign investors. Despite the substantial correction, which stood at 11%, the market remains resilient due to strong domestic participation. Looking ahead, what lies next for NIFTY? Let’s delve into that…

First we need to understand that Indian economy remains a bright spot among the major economies and domestic flows into the market will remain strong. Now, the FIIs will also be willing to invest after lots of selling, so is the market normally expected to go up? What does the chart suggest? Let’s look into chart reading and will finalise our analysis on the same basis:

This is daily NIFTY chart which suggests that we are in a correction wave and not a bull wave. We see the bull wave to start losing steam around 25,000 levels. If not before that, most likely a spurt of 200-300 points may take it to 25300. Beyond that it may rise to 26,000 only if all the stars and macro economic factors align properly. So, we must trade NIFTY as of now with 25000 as upper range. But in the first part of this article, we have provided logic that NIFTY is expected to have good in-flows, so are we going to see a fall in NIFTY?

Charts suggest that after 25,000 as the peak, NIFTY will start downward journey towards 23,000 or even 22,000. But we doubt that considering the strong inflows which will counter that kind of crash. Hence, we expect that NIFTY will be range bound with good volatiity in next 2-4 months with broad range of 23000 to 25000/25300