The equity market continued to experience bullish sentiments on December 4, 2023, pushing benchmark indices to all-time high levels. Nifty jumped to reach record highs by up 300 points.
At the moment, Nifty, with a Relative Strength Index (RSI) of 80, the highest level since July 2023, is in the overbought territory. An RSI reading in the zone of anything over 70 highlights an overbought condition.
The benchmark indices such as NSE Nifty 50 and S&P BSE Sensex registered new all-time highs on December 4, 2023. The 30-share Sensex surged to over 1,000 points to 68,588, while the 50-stock Nifty jumped over 300 points to 20,603.
Analysts state that in a trending bullish market, RSI tends to be in the overbought zone at around 70-80, and the index continues moving higher amid short covering and strength in the underlying stocks.
So, there is a possibility that RSI is anticipated to be in the overbought zone for the next couple of days, and bullish sentiment is likely to continue, pushing the benchmark index towards the 20,800-20,900 mark in the forthcoming trades,
Experts say the index has almost surged by 10% in a mere 27 trading sessions. While the RSI reading is hovering at 80 level, this is not the highest, however.
Earlier, the RSI reading had surged to almost 83 levels. Historically, Nifty has closed on a positive note for 74% of the time in December, with an average gain of 3.3% over the past 27 years.
Moreover, the trend remains upbeat, with a potential upside of up to 21,000. However, the possibility of a mild correction in terms of price or time cannot be ruled out, as per experts. As a result, any dip in the index could extend the right opportunity to buy.
Rajiv is an independent editorial consultant for the last decade. Prior to this, he worked as a full-time journalist associated with various prominent print media houses. In his spare time, he loves to paint on canvas.