In the “January 11th” edition of the stock market outlook, we inferred that the general trend of the all-share index was up. The market breadth indicators, also, were positive and have shown little signs of weakness since then. The 9-month trend that began in April 2020 has remained strong and we can, now, safely argue that the index has been in an uptrend for the last 10-months. Whether the uptrend will continue is an entirely different question – so, let’s talk about it.
The monthly chart of the NSE all-share Index
- The all-share index has been in a slightly upward tilting channel from the April low to the end of last week (represented by the two white parallel lines on the chart).
- Based on the channel, through which the all-share index seems to be traveling, we estimate the next major resistance to be around 46,000 points.
- Since the high that was made, at 42,000 points, in July 2014, we have seen the all-share index struggle to break past the 42,000 level, two more times (the white circles on the chart). The index just recently (last week) tested the level again and looks like it is already struggling to stay afloat.
- The rally which started in April 2020 has seen the index close higher, 9 out of 10 times. The only losing month was in June 2020 and that loss was a net 3% decline. February, if it ends negative, will be only the second month where the index has failed to end “in the green”.
- The average monthly gain, during the 10-month rally to date, has been approximately 8.4%.
- The average monthly gain, during the last four months of this rally, was 12.18%.