Indian markets at fresh all-time high; India VIX gains over 3 per cent to cross above 15 mark!

Market Update at 10:00 AM: Indian markets continued scaling higher as Nifty logged a fresh all-time high and is trading around the 17,400 mark. Sensex & Nifty have gained 0.43 per cent and 0.42 per cent, respectively on Monday.  

Among the sectoral indices, Nifty Media and Nifty Energy emerged as the top gainers while on the flip side, Nifty Metal and Nifty Bank were seen trading in the red.  

The broader markets were also seen in buoyant mood with Nifty Midcap 100 and Smallcap 100 trading up by 0.21 per cent & 0.66 per cent, respectively. However, currently, only one point that is concerning for the market is that despite the market trading at fresh lifetime highs, India VIX has shot up over 3 per cent and is trading above the 15 mark.  

It was a historic week for Nifty as out of five trading sessions, Nifty gained in four while in each trading session last week, it registered fresh highs. For the week, Nifty had gained 3.70 per cent and closed at 17,323.60.   

The performance by broader markets was commendable as they outperformed the frontline gauge with Nifty Midcap advancing 4.89 per cent while Nifty Smallcap jumped 4.05 per cent.   

Nifty has risen by 1,810 points or 11.67 from July 28 low in just 26 sessions. Just before June-July consolidation, Nifty rallied 12.37 per cent in almost 37 sessions.  

Now the question is how long the rally can sustain? The classical technical analysis defines that any sharp upside is likely to be followed by a counter-trend consolidation as we have seen in the earlier instances. This consolidation can take the form of a flat base, flags, or a pennant pattern. Within the last month's rally as well, we had observed the formation of two small consolidation bases. These bases are important to get clues about trend continuation or a reversal.  

Since the index is trading into uncharted territory, we move on to seasonality analysis to get a check on how the market will perform in the month of September. The seasonality chart shows that September month's performance is subdued with a 55 per cent positivity rate in the last 15 years.   

Interestingly, for the month of September, we anticipated that the auto and bank indices could outperform the broader market. Seasonality analysis indicates that in the month of September, Nifty Bank has delivered an average return of 4.3 per cent, which is its second best. Meanwhile, the auto index has delivered an average return of 2.9 per cent in the month of September. As the index is at a new lifetime high, no momentum indicators show the weakness. However, the RSI has entered into overbought territory. Considering that it entered into overbought territory, we could see a counter-trend consolidation, which has support placed at 17,050, followed by 16,890.  

On the upside, the level of 17,340 is likely to act as a resistance, followed by 17,550 levels.