The Nifty on Wednesday ended down 60.10 points or 0.4% at 16,356.25. Despite the recovery from sub-16,000 levels, the benchmark index is down nearly 10% from all-time high levels touched in October last year.
Elara said the 16,050 level is a post-breakout average price of the Nifty and it is the approximate cost of investors who entered the market post-2020.
The brokerage said ‘ shares have the foundation for a sustainable uptrend that could help in the market recovery. “Outperformance of could be an important feature in the medium term,” said Elara.
According to the firm, many stocks would have reached attractive levels when the Nifty hit this point which drives some demand. Investor appetite is still not dented and there is a propensity to buy, the brokerage said.
“A successful stress test of this key market level would mean bull market restoration is not that difficult and can be sooner than later,” said the brokerage in a note. “But if the stress is not cleared successfully and the market loses this ground, investor appetite would be badly dented, which would delay restoration of bullish trends extending the lifecycle of the bearish trends,” said Elara. The firm added that 16,765 is the key hurdle for the Nifty.
Elara said a market rebound may get a key contribution from the banking sector. “India’s banking has taken support at a crucial trendline, hoping to arrest the market downtrend around the important 16,000 zones,” said Elara. There is also a good probability of a bottom in the IT services index, the firm added.
The BSE Information Technology index ended up 0.2% at 29,948.75 but the index is down nearly 21% for the calendar year 2022. The index is in a bear market zone as it has fallen 22.6% from the record high of 38,713.3 hit on January 17.
