Nifty makes new record with No. 13; but it's an ominous sign for bulls
trading sessions, Nifty has created a new record of longest winning streaks in Dalal Street's history but the gravity-defying No. 13 feat can now create trouble for bulls going forward.
Such long periods of uninterrupted winning streaks are usually followed by negative returns. A study of Nifty's marathon runs lasting at least 9 days while being within 1% of its all-time high shows that the index has given negative returns of 3% in the next one month.
The analysis by Samco Securities shows that the headline equity index has a general tendency towards a short-term pullback after such strong performances.
In May 2006, for example, Nifty rallied non-stop for 9 days and was just 0.10% away from its all-time high but the next 1 month created havoc with the index falling 24%. In February 2000 also a similar trend was seen when the index rallied for 9 days but then fell 11% in the next one month.
In 2014 and 2015, when the index rallied 10 days at a stretch, the next one-month saw 1% correction each time. However, 2007 was an exception when the 11-day non-stop marathon ended up giving an upside of 14% in the next one month.
Also read | September months prone to profit booking but momentum looks positive. Here’s how to trade Nifty
In the last 13 trading sessions (till Monday), Nifty is up 1,140 points or about 5%. Monday's session was the index touching a new peak of 25,333.65.
Even the trading range and market breadth showcase exhaustion as the market has been surging higher recently with weak overall breadth.
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