It was nothing short of a Chartist delight when I discovered breakouts across the time frames as I delve through historical charts of different indices. The conclusion? Each time frame Chart was throwing up its own target for Nifty50.
On daily time frame target was 11100, on the weekly chart, it is 11533, monthly chart it is 12005, and on the quarterly chart it was about 13,500 on the Nifty50.
This bull Market which was till now dominated by a handful of sectors with minimal contribution from pivotal names like IT, Pharma, Capital Goods, and Metals are suddenly looking much stronger and robust with broad-based participation as leadership appears to be changing from Financials to IT and becoming much wider.
Besides many sectors which were lagging till now have either registered breakouts or on the verge of a breakout on the longer time frame charts which shall facilitate Nifty50 in achieving bigger targets.
Is it possible to deliver 20% return year after year?
Now, the moot question to address whether this kind of lucrative target is possible after registering 28 percent gain of last year is possible. For that historical data has the perfect answer.
In the last Bull Market of 2003-2008, the market registered a gain of 40-45 percent every year for the next three years in a row from the year 2005-2007.
In the bull market of 1990s market saw a minimum 30 percent gain for consecutive years of 1990, 1991 and 1992 in a row. Before that, in 1981, the S&P BSE Sensex delivered 53 percent return after netting a gain of 24 percent in 1980.
Based on historical data analysis, it is clear that indices can post a decent 25-30 percent gain year after year. Hence, we can’t rule out the lucrative target of 13,000 on the Nifty just because indices already delivered a 28 percent return in the year 2017.
Technically, what gives confidence to me is the fact that index consolidated for years 2015 and 2016 and then registered a breakout in the year 2017.
This on longer time horizon should be read as a consolidation breakout which should pave the way for bigger long lasting up moves.
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