Nifty’s 200-DEMA breach gave positive returns 10 of 11 past times: Report
A report by Bajaj Broking suggests that historically, out of 11 instances analyzed (excluding the COVID-19 market crash), the Nifty showed positive returns in 10 cases over a one-year period. This track record further emphasizes the potential significance of the recent EMA touchpoint.
According to the research, this technical event has historically been a harbinger of positive market performance. An analysis of NSE data spanning seven years reveals a compelling pattern of returns following EMA touchpoints.
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The data shows remarkable consistency in market performance after the Nifty touches its 200-day EMA. In the past, the index demonstrated impressive return potential:
- One-month returns averaged +3.0%
- Three-month returns climbed to +5.5%
- Six-month returns reached +9.3%
- Twelve-month returns soared to +17.6%
Notably, the probability of positive returns increases with time. Investors have seen:
- 58% chance of gains within one month
- 83% chance within three months
- 91% chance within a year
(Nifty 12-month returns after touching 200 DEMA. Source: Bajaj Broking)Analysts at Bajaj Broking are viewing this development as a potential bullish indicator. The 200-day EMA seems to be serving as a critical long-term trend indicator, helping market participants identify underlying market momentum and potential investment opportunities.
While past performance doesn’t guarantee future results, the historical data provides an intriguing perspective for investors considering their market strategy in the coming months.
Around 1:30 pm today, the index was trading 0.73% or 172.15 points lower at 23,350.
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)
