Bull run ends here, massive correction on cards! Phillip Capital sees Nifty falling 15% to 18,550

livemint.com:

BSE Sensex hovering near record highs. However, brokerage firms are adopting a cautious stance following this prolonged rally. Phillip Capital, in a recent report, predicted that Nifty's euphoric rally is likely to see a sharp decline.

According to the brokerage, the Nifty could potentially plummet to 18,550 in what might be a prolonged correction lasting a minimum of three quarters. This represents a significant 15 percent decline. In a worst-case scenario, the Nifty might even test levels as low as 16,000-15,500, indicating up to a 29 percent decline, it warned.

In such a scenario, the correction could extend over a longer period, potentially lasting 6-7 quarters, noted the brokerage. "We see an intermediate topping out of Nifty with the present rally being the last bull leg of this cycle," it said. In the current bull run, going on since 2014, the brokerage house pointed out that over the past decade, the market has witnessed a robust bull run since 2014, resulting in a 3.4 times increase in Nifty levels from 6,500 to 22,500, reflecting a compound annual growth rate (CAGR) of 13 percent.

But now Phillip Capital sees signs of exhaustion noting that the markets remain 'highly overbought' on a long-term time frame. Nifty is presently in a 'greed' cycle and we are in the last leg of the rally after which we expect a healthy price as well as the time correction to play upon the markets. Nifty50 is trading at an important trendline resistance on quarterly charts with highly 'overbought' momentum oscillators, which sees limited upside and high probability of correction in the index," said the brokerage.