“If the price structure and accompanying technical indicators are compatible with a near-term peak at the 14,100-14,200 area, we will look to take some profits. If they are not compatible, then there will remain greater bullish potential,” said Balanco in a note on Thursday. “…from a long-term perspective, this impulsive advance off the March low is seen as the initial leg of a new bull cycle which followed the cyclical bear market decline off the May 2019 highs,” added Balanco.
Balanco said this long-term structure provides us with a multi-year upside target of 18,800 for the unfolding advance off the March lows.
Indian stock indices hit their lowest level in four years in March this year after a sharp sell off in the wake of coronavirus outbreak turning into a pandemic and bringing most economic activities to a grinding halt. Nifty hit a low of 7,511.1 and Sensex hit a low of 25,638.9 on March 24.
As cities and countries opened up after weeks and months of lockdown around June-July, economic activity started picking up. Indices have gained more than 80 per cent from those March lows, and more recently got a lift from development of vaccines for coronavirus.
Balanco’s has outlined a case for a potential structural breakout in emerging markets, which is also his key call for 2021.
