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Published on 15/04/2019 5:28:55 PM | Source: ICICI Securities Ltd

Golden Cross – Rally on track, time to board for 13000 - ICICI Securities

Posted in Market Outlook| #Market Outlook #ICICI Securities

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Golden Cross – Rally on track, time to board for 13000

The benchmark indices rallied 18% since October 2018, aided by strong foreign inflow as central banks across the globe turned dovish.

As we approach the crucial event of General Election 2019, the price structure of the Nifty indicates a major shift in trend direction as it recorded a “Golden cross” along with similar crossover in index constituents collectively contributing 73% to the index weight. This makes us reinforce our positive stance by revising our earmarked target upward at 12800 - 13000 by FY20, as it is confluence of:

* Since June 2003 in seven out of nine occasions “Golden Cross” on the Nifty has produced minimum 15% return in the following year

* It also corroborates our CY19 Technical Outlook, providing minimum 15% return post general election, that projects a target of 13000

* Bottom up approach also validates our target of 12800

* According to classical technical evidences, 161.8% external retracement of last major decline (from August 2018 high of 11760 to October 2018 low of 10005), placed at 12850

 

“Golden Crossover”

In keeping with everyone’s watchful expectation, the NSE Nifty’s 50 day moving average (10890) on March 15, 2019 (Nifty @ 11427), recorded a bullish crossover above 200 day moving average (10889), thus generating a Golden Crossover. In technical parlance when a medium-term moving average (50 day) crosses a longer-term moving average (200 day) it is termed as a “Golden Cross”. As long-term indicators carry more weight, the Golden Cross represents a major shift in momentum from the bears to the bulls and indicates a bull market on the horizon. Additionally, the long-term moving average (200 SMA is currently placed at 10960) becomes the new support which we do not foresee to breach in the rising market.

Target of 12800 – 13000 is based on:-

* Since June 2003 it has been observed the index has rallied a minimum 15% over the next year subsequent to “Golden Crossover”, in the current scenario it projects 13000

* According to classical technical evidence, 161.8% external retracement of last major decline (from August 2018 high of 11760 to October 2018 low of 10005), placed at 12850

 

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