Nifty’s next move: What Reliance and HDFC Bank are signalling
Subscribe to enjoy similar stories. Over the past month, we have witnessed a significant correction in Nifty50, marking the first double-digit correction in the last four years. During this period, many mid- and small-cap stocks have seen sharp declines of over 50%, which, although common during corrections, is concerning when it affects frontline stocks.
Greed turns to fear, and as Warren Buffet says, “Be greedy when others are fearful…" The current reversal saw frontline stocks across multiple sectors decline by more than 20%. The November reversal from 23,300 to close above 24,000 indicates that Nifty50 has established a structural bottom near the 23,300 level, followed by a bounce back above 24,400. The daily price chart shows the index has broken out of its falling channel, with a significant gap-up opening.
More convincingly, the index filled that gap and experienced a strong pullback, which continued with buying activity on Monday, 2 December, post-November F&O expiry. As we approach this potential recovery phase, readers can take two distinct approaches when selecting stocks: 1. Stocks that have corrected significantly—If the overall market recovers, these may offer opportunities for a rebound.
2. Stocks that have shown strength during the correction are likely to perform well if the market continues its upward momentum. Since the start of October 2024, Nifty50 has corrected by over 6%, with Reliance Industries standing out as one of the worst performers, down by 12%.
Conversely, HDFC Bank has shown resilience, delivering a positive return and trading at an all-time high. It seems like the monarchy rule can begin again on D-Street. Here are our two monarchy rulers that can lead the Nifty50 higher.
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