Bullseye: Nifty likely to hit record high by June, but rally may not match pace seen in April

Bull Market Ahead

The Nifty 50 recorded a swift rally of 11.5 percent, or nearly 2,500 points, in just nine days — from a low of 21,743.65 on April 7 to a high of 24,242.6 on April 22. The major driver behind this robust run has been the banking & financial services sector, which also provided similar returns.

This clearly suggests that the market seems to have found the floor after the Trump-led tariff risk emerged at the beginning of the current month and may get back to previous record high levels by June 2025, experts believe.

The chart pattern and technical indicators signalled a strong trend ahead despite possible intermittent consolidation and profit booking, which generally gives more strength to bulls to ride higher.

After forming the bottom on April 7, the index saw two back-to-back big breakaway gaps (April 11 and April 15), which strengthened the confidence among bulls to take the rally further after indications that India is facing less risk from the tariffs, though future announcements by Trump related to tariff may bring volatility in the market.

The index has traded well above all key moving averages (10, 20, 50, 100, and 200-day EMAs), with short-term moving averages having already crossed medium- and long-term moving averages and trending upward, which is a healthy sign.

As a result, the index decisively surpassed its swing high (of 23,870 in March) in the previous session and seems ready for a move toward another swing high (24,858 in December) followed by a 78.6 percent Fibonacci retracement at 25,300 in the coming weeks. Before that, it has to clear the crucial hurdle of a 61.8 percent Fibonacci retracement of 24,550 (from September 2024 high to April 2025 low).

"The current rise looks to be only wave one and we are yet to see wave two, which might be 10 to 12 days of consolidation post that wave three on the upside should start. So, Nifty can probably test lifetime high levels, but it might take nearly around 2 to 3 months of time before that is achieved," Ashish Kyal, CMT, Founder and CEO of Waves Strategy Advisors said.

Rajesh Bhosale, Technical Analyst at Angel One, also believes the potential rally is expected to take the Nifty to a new high by mid-June.

The Nifty posted gains for the sixth straight session. The index has broken out of the 23,900 zone in the previous session, which previously acted as resistance during February and March. This breakout confirms a ‘saucer’ pattern on the charts, Bhosale said. The pattern, which developed over nearly three months, spans from the April lows of 21,743 to the breakout point of 23,900, a range of approximately 2,000 points.

"As per technical pattern projections, a breakout from such formations typically mirrors the prior move, suggesting a potential upside of another 2,000 points. This places the target near 25,900, close to the all-time high of 26,300. Given that the pattern took around three months to form, the target may materialise in half that time — roughly 45 days — which aligns with a potential new high by mid-June, provided the momentum continues," Bhosale reasoned.

According to him, the immediate resistance is seen at 24,550, which coincides with the 61.8 percent retracement level of the entire decline from the all-time high.

However, before this rally resumes, both experts expect some retracement or consolidation in the coming days as technical parameters on lower timeframes already show signs of fading momentum and overbought indicators.

On Tuesday, the Nifty 50 formed a Doji-like candlestick pattern on the daily charts, signalling indecision among bulls, while the Bank Nifty showed a Shooting Star-like pattern formation (not a classical one), signalling some trend reversal after the robust rally.

Generally, profit booking serves as a breather for bulls to recharge and back into a fresh strong mood.

"It has also retraced the prior fall in faster time, which confirms that the overall trend for Nifty has reversed on the upside. Having said that, the short-term indicators are overbought, so it is important to get some kind of a retracement to the extent of 23.6 percent or 38.2 percent for the rally to continue on the upside," Kyal of Waves Strategy Advisors said.

According to him, correction over the short term will be a healthy sign, allowing those who missed the rally to enter, and then one can expect the up-move to resume to a lifetime high level of 26,277.

Immediate support on the downside would be around 23,200 levels, which is the strongest zone and the gap area of the entire rise, Kyal said.

Bhosale of Angel One also believes that with indicators currently in overbought territory, some intermittent pauses or minor pullbacks cannot be ruled out.

On the downside, the bullish gap between 23,800 and 23,900 is likely to offer immediate support, followed by strong support at the 89 EMA placed near 23,400.