Nifty up 1% for the fourth time in 5 days in rare trend

Representational image of the NSE Nifty building

Nifty 50 closed 1.15% as banking stocks increased on Monday. Analysts attributed the strong earnings reported by banks and some IT companies over the weekend behind the upturn. The corresponding sectoral indices showed an over 3% rise.

In what experts described as a rare trend, the benchmark Nifty 50 was up more than 1% in four out of the past five trading sessions where the returns were positive. This is the sixth time the markets have shown such a trend in the past decade. “In the past decade, we’ve had five similar signals and all of them were seen during the COVID crash,” said Akshay Chinchalkar, Head of Research and Content at Axis Securities.

The pattern was noticed on May 27, July 15, and then for 3 straight days between November 3 and 5 in 2020.

“Five days after the signal, the market was higher by an average of 1.6%, 20 days later, it was up 5.1% and in about two months, it had returned 15.7% to the investor, triggering the bull market that then led to an increase in retail investor participation,” Mr. Chinchalkar said.

“As all of them occurred in 2020, the message is very clear — this kind of movement tends to cluster during periods of strong momentum peppered with high volatility,” Mr. Chinchalkar observed.