Nifty target 10,000 – Technically speaking

The monthly chart of CNX Nifty Index showed a big bull run until the 2008 period which started in 2003 when the Nifty traded at the 900 level.  Within five years, the Nifty registered a sevenfold increase, gaining 5400 points.

After touching the 6300 mark in 2008, the Nifty dropped to the 2230 level, like a waterfall. It then pulled back from where it started tumbling. After breaking out above the 6300 level in March 2014, the Nifty gained 1400 points.

Following an in-depth technical analysis and taking a broader view, we conclude that the market is in the midst of another bull run, perhaps an encore of the Bull Run seen during 2003-2008.

We have applied the Fibonacci Price Extension technique to the Nifty Monthly chart. Based on our study of the first Bull Run from the 900 to 6300 level and the second correction from 6300 to 2230 level, we expect the third Bull Run to be at least 161.8% higher than previous move, which gives us a target of a five-digit number of 10000 for the Nifty for the first time.

When we talk about the five-digit target of 10000, we should also look at the time horizon for the target. After applying Fibonacci Time Extension to the monthly chart from the bottom level, we see that the price reverses from the Fibonacci Time levels. Based on our calculations of the time extension for the next reversing point, we believe this Bull Run may continue for 18-20 months more.

We have always heard the phrase “Nothing is impossible in Life”. I think this applies to the market as well. The 10000 target for the Nifty in 18-20 months is just one of the possibilities and one should not rush to buy the index and stocks.

Written by:

Sumeet Jain, CMT

Equity Research Desk

Disclaimer: Investment in securities market are subject to market risks, read all the related documents carefully before investing.

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