Nifty hits new high; Can it topple 20,000-mark? Here's what history hints

The NSE Nifty 50 on Wednesday scaled a new high after 142 trading days. The average swing returns since 2018 are 32.8 per cent suggesting an upside target beyond 22,000-mark.

The NSE Nifty 50 hit a fresh all-time high at 18,908.15 in intra-day trade on Wednesday June 28, 2023, after a gap of 142 trading days. Positive global cues, a strong rally in banking shares in the backdrop of HDFC-HDFC Bank merger and dip in crude oil prices boosted the market sentiment today.

Historically, on an average the Nifty has spent around 363 days before scaling new peaks since the year 2000, shows data. This was largely due to a prolonged bear phase between January 2008 and March 2015.

Over the last five-odd years, since January 2018, the Nifty 50 has registered a new summit after an average gap of 153 trading sessions. The longest duration was 275 days, which the Nifty took between October 19, 2021 peak of 18,604.50, to a new high of 18,887.60 on December 01, 2022. Whereas, the shortest period was from February 16, 2021, to October 19, 2021 - i.e. 67 trading days.

Here comes the interesting part; the average gain on the Nifty 50 from its recorded low post the preceding new high comes at a whopping 88.3 per cent in the last 23 years and six months. The average returns from similar swings post 2018 also stands at a strong 32.8 per cent.

In the present scenario, the last recorded high was 18,887.60 on December 01, 2022; thereafter, the Nifty 50 reached a lowest point of 16,828.40 on March 20, 2023. At today's new high of 18,908.15, the 50-share index has generated a decent 12.4 per cent return in little more than three months.

"The Nifty surged to an all-time high, propelled by solid fundamentals of the Indian economy and recent stability in global markets. The market sentiment indicates a sustained structural bull run, making it difficult to assign an immediate target to this upward trend", said Santosh Meena, Head of Research at Swastika Investmart in a note.

Going ahead, levels around 19,000–19,191 could potentially serve as a resistance area, which might trigger profit booking. On the downside, the immediate support level for Nifty is at 18,700; while 18,450 can be expected to provide a substantial base for the market, Santosh adds.

However, history suggests that based on the average swing returns even in the last five years and six months (post 2018), the Nifty may still have a long way to go – as the returns stand at a solid 32.8 per cent. This projects a potential upside target of 22,348.12 for the Nifty 50.

On a conservative note, the least gain the Nifty has seen between a record high and the ensuing interim low is 16.9 per cent - i.e. from a low of 10,637.20 hit on August 23, 2019, to a new high then registered at 12,430.50 on January 20, 2020. This projects an upside target of 19,665.67 for the NSE benchmark.

Similarly, a 20 per upswing from its recent March 2023 low could see the Nifty 50 topple the 20,000-mark, and hit a high around 20,200-odd level.

Deepak Jasani, head of retail research at HDFC Securities, for instance, suggests that the Nifty50 needs to decisively cross the new high for the bullish momentum to sustain. 

If it does so, then the momentum itself can generate another 2 - 3 per cent rally from here on. That said, monsoon remains a big trigger. If the El Nino factor does not play out as feared, then the Nifty may reach higher levels in the present move itself," Jasani adds.