The recent rally seen India’s benchmark Nifty 50 index is poised to continue for the near-term for an upside target towards 26,300, according to top CLSA Chartist Laurence Balanco.
In case of a breakout above levels of 26,300, the target for the Nifty 50 index extends towards a long-term target range of 31,000 – 40,000, Balanco said in an interaction with CNBC-TV18 on Monday, November 9.
Speaking at the CITIC CLSA India Forum, the technical analyst highlighted a rare monthly indicator that could soon flash green. “If we close above 25,500 by the end of November, [it will] actually generate the first long-term buyer signal that we’ve not seen since August 2020,” Balanco noted. Since 1993, this signal has appeared only 12 times, yielding an average 12-month return of over 34% on the Nifty.
What Will Lead The Nifty Rally?
The banking sector is expected to be the primary engine for this rally, according to Balanco, who noted that the Nifty Bank recently broke out of a trading range that had been developing since February, opening up an upside potential of another 20% from current levels towards the 70,000 mark, he added.
Within the banking space, ICICI Bank is identified as the clear leader with a target of ₹1,900 to ₹2,000, while HDFC Bank remains range-bound. The IT sector is also expected to support the broader market, having formed a five-month head-and-shoulders base that points to an upside target of 40,000 for the NSE IT index, Balanco projected during the interaction.
For investors looking at relative underperformance, the materials and metals space is rolling over after leading in the first half of the year. The fast-moving consumer goods (FMCG) sector also remains in a well-defined three-year downtrend relative to the Nifty, making both sectors candidates for an underweight stance or a funding short.
Elsewhere in the Indian market, exchange stocks are resuming their uptrends, with Multi Commodity Exchange of India (MCX) leading the way and BSE setting up to retest its earlier highs.
On the global front, US technology stocks are showing weakness. The NASDAQ has broken down, pointing to a downside target of 23,800. The S&P 500 is likely to remain range-bound, with support at 7,000 and overhead resistance at 7,600, supported by a rotation into defensive sectors. Asian peers like Korea and Taiwan also face further downside risk, with the Taiex breaking its 200-day moving average and July lows without any evidence of a base developing.
In commodities, Brent crude is pressuring the bottom of its recent trading range. A break below $97 would target $90, a level that would signal Middle East de-escalation and prove constructive for risk assets. Gold appears to be forming a floor, offering an accumulation opportunity around the 4,000 level for an ultimate break above 4,500, while silver, which recently broke below $55, requires more evidence before adding positions.
Meanwhile, the US dollar’s major 2022 peak remains intact as long as the index stays below 107. A recent breakdown in the dollar-rupee pair suggests the Indian currency could strengthen further towards the 91 mark, according to Balanco.
For the full interview, watch the accompanying video
Nifty could hit 26,300 first, 31,000-40,000 later if rare buy signal triggers: Laurence Balanco
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Nifty rally can take index to 40,000 in the long term, says CLSA’s Laurence Balanco; Check Nifty Bank target