Party’s just begun - Nifty to hit 10,000! :: IIFL

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 The year 2014 has seen a 6‐year breakout in equities, an ideal setting for what could possibly be a multi‐

year bull run in the making. The trend this year has been buying on every dip and the same is likely to

continue for a long time to come. Index in 2014 has seen a breakout from an ascending triangle pattern

and also from a cup & handle pattern. The implications of breakouts on monthly charts are not only going

to continue for many months, but many years as well.

 All signs point towards a perfect trait of a bull market. Set up of higher tops and higher bottoms and

sectoral rotation post the 6‐year breakout has helped the index sustain at new tops.

 Nifty was in a declining curve for most part of 2013 with rallies faltering near long‐term bearish resistance

line on monthly charts. Even successful breakouts on weekly charts proved to be whipsaws. But the

spectacular rally from March 2014 (low of 6,216) has been one sided with no meaningful correction.

 From March 2014, Nifty has witnessed short time corrections and shallow price corrections thus depicting

the underlying strength in the current movement.  

 Historically, October has been a negative month for the Indian market, but this time was noticeably

different. The rising trendline since March 2014 on the daily chart provided strong support, reinforcing

solidity in the index. There was lot of pessimism when Nifty touched 7,723 in October 2014 during the

down thrust but a spectacular pull back above 8,180 has brought the bullish bias back.

 Events of the last nine months, especially the broad based participation post the breakout of 6,300 at the

top and thereafter base building activity between 7,450‐7,850 has changed the overall structure of the

market. As long as the index sustains above 7,450 levels, the positive bias will prevail. Moreover, the index

is moving within the context of rising channel on the daily chart and within that channel it is consolidating

within a bullish Inverted Head & Shoulders pattern.

 The amplitude of the triangle breakout mentioned earlier and the breakout projection corresponds to

target of 10,300 within 18 months. Based on the above mentioned observations, the bullish structure

has more legs on the upside. Bull markets tend to go through period of corrections and consolidation,

but the larger trend will continue to remain on the upside.