Market analysts see NIFTY rally sustaining, say correction won’t last

Technical trends of last year’s 6% to 7% market fall signal a possible index rebound; the Fibonacci ratio 61.80% retracement levels support the market rally.

NIFTY 50 Index’s correction seems temporary

The NIFTY 50 Index’s recent corrections seem temporary in nature. The rally’s continuation seems realistic as experts anticipate a market rebound. Analysts support this view considering the history of the NIFTY in 2020, when the index saw seven corrections. This bounce back has been after a decline in the NIFTY of over 6% to 7% in 2020 (except for in May).

The Fibonacci ratio of 61.80% supports a market rebound

NIFTY corrections were below the 7% mark after June 2020. The event of minor price pullback also followed the rallies. Out of seven instances, such performance uniformity is found in five instances near the Fibonacci ratio 61.80%. This ratio being, for stocks and indices, a primary support plus resistance mechanism, supports the bull run’s continuation. In the short-term, the 61.80% Fibonacci ratio stands to offer the required support. More so given a fall at the 14,335 (February 2, 2021) levels.

What’s noteworthy in the NIFTY Index’s historical trend

The NIFTY recovery follows a correction of less than or equal to 7% in September and January, 2020. This event draws attention towards an almost 5% fall in the index in October and December, 2020, prior to recovering. Exceptionally only in the initial period of May 2020, the NIFTY index faced a correction of 11% prior to its bounce. The peculiar nature of the index correcting to the tune of 7% to 10% during a sustainable bull run is noteworthy. In a bear run, the index tends to typically fall over 20%.

Investors should continue to invest in the market given the support indicated by the Fibonacci ratio.

Sources: team analysis, market data, team research, press articles