Indian stocks are currently among the strongest equity markets worldwide. The black scenario is our base case whereas the red scenario is our best alternative.
We expect the Nifty 50 to work its way straight on to the upside. This means that it should trace out a 3rd wave to the upside at this stage. It should be strong and not allow sizeable corrections. This is more or less defined by about 3% in the Nifty. Moreover, the green trend channel should hold comfortably. If all of that is not happening, it is probably not the 3rd wave yet! Odds shift towards the red scenario in that case.
An unfinished double-three correction could swing us up as part of an (x) wave right now. This is depicted by the red scenario, which carries slightly lower odds than the black scenario. Alternatively, we may also see an ending diagonal going into the top, which is not depicted in our charts. Both this scenarios require a fade and reversal very soon. Moreover, both will retrace probably much more than 3% and violate the green trend channel notably.
All in all, we are short-term bullish on the Nifty 50 until proven differently.
