Chartist Talks: ICICI Securities' Dharmesh Shah expects Nifty to clock a fresh all-time high in coming quarter

Historically, since 2002, within a structural bull market, price wise maximum intermediate corrections have typically been to the tune of 18 percent (barring 2004 & 2006). Meanwhile, time wise such corrections last for average 8-9 months. In tandem with the historical evidence, with past seven months 17 percent correction Nifty has approached maturity of price and time wise correction.

In addition to that, buying near 52-week EMA has offered favourable risk reward with a median return of 23 percent in next 12 months with median drawdown below 52-week EMA of 6 percent. Even in current scenario, index maintained the same rhythm of witnessing buying demand from the vicinity of 6 percent below 52-week EMA.

Thereby, taking cognizance of aforementioned evidences, we expect index to clock a fresh all-time high in coming quarter.

Do you believe the current consolidation will resolve with a strong breakout on the upside, with the Bank Nifty potentially hitting a new high in the coming week?

The elongation of rallies followed by shallow retracement is key ingredient of a structural bull market. Currently, the recent up-move in BankNifty is larger (14 percent) as compared to that observed in previous month (9 percent). Additionally, the declines are getting shallower as the recent decline is of 4.6 percent as compared to 5.6 percent observed in Mar-25.

We believe the Bank Nifty is undergoing healthy consolidation that would set the stage for next leg of up move towards 57,000 in coming months.

What is your trading strategy for the Nifty for the upcoming week?

The Nifty logged a resolute breakout from three weeks consolidation 24,500-23,200 that resulted into acceleration of upward momentum. Significant improvement in market breadth signifies broader market participation that makes us reiterate our positive stance of Nifty heading towards 25,500 in coming weeks. Hence, buying dips would be the prudent strategy to adopt as strong support is placed at 24,400.

Do you expect the momentum in the Nifty Auto index to continue, given the support from technical indicators?

The Nifty Auto index has staged a strong recovery backed by faster pace of retracement as past thirteen weeks decline got entirely retraced in just six weeks, indicating structural turnaround. Additionally, the recent tariff development further augurs well for the auto index. Going ahead, we remain positive on passenger vehicle (PV) segment, auto ancillary and tyre stocks.

Is the Nifty Defence index looking overbought, or do you believe there is still more upside potential?

The defence sector has witnessed a sharp upmove in the last couple of months, tracking the escalation of ongoing geopolitical tension. Hence, the possibility of normal profit booking on the back of the sharp rally in the current week cannot be ruled out. Any dip from hereon should not be construed as negative; instead, dips should be capitalized as a buying opportunity from the medium to long-term horizon, as the broader bullish structure remains intact.

Do you see the Nifty Healthcare index surpassing its April swing high in the coming week?

Key point to highlight is that the Nifty healthcare index has been witnessing a lower pace of retracement, as with the past seven months decline, the index has retraced merely 61.8 percent of the preceding four months rally, which clearly highlights a robust price structure. After a 17 percent correction seen during October 2024 to March 2025, the index is undergoing a higher base formation above the long-term 100-week EMA, which makes us believe, index would eventually resolve above the past three months' high of 14,275 and extend the ongoing up move.

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