On December 4, 2023, the equity market continued its bullish trajectory RSI, propelling benchmark indices to new all-time highs. The Nifty surged by an impressive 300 points, reaching record levels.
Currently, the Nifty boasts a Relative Strength Index (RSI) of 80, the highest since July 2023, indicating an overbought condition. An RSI reading exceeding 70 typically suggests an overbought market situation.
Both the NSE Nifty 50 and the S&P BSE Sensex achieved new milestones on December 4, 2023. The Sensex, comprising 30 stocks, soared by over 1,000 points to 68,588, while the Nifty, consisting of 50 stocks, experienced a surge of over 300 points to reach 20,603.
In a bullish market trend, analysts note that the RSI tends to linger in the overbought territory, typically around the 70-80 range. During such periods, the index continues its upward trajectory, fueled by short covering and strength in underlying stocks.
With the RSI anticipated to remain in the overbought zone for the next few days, experts predict that the bullish sentiment will persist, potentially driving the benchmark index towards the 20,800-20,900 mark in the upcoming trading sessions.
While the current RSI reading stands at 80, it is not the highest observed. Previously, the RSI surged to nearly 83 levels. Historically, December has been favorable for the Nifty, with a positive closing recorded 74% of the time over the past 27 years, accompanied by an average gain of 3.3%.
The overall trend remains positive, with the potential for further upside towards 21,000. However, experts caution that a minor correction, either in terms of price or duration, cannot be discounted. Consequently, any downturn in the index could present an opportune moment for investors to capitalize on buying opportunities.
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