$NIFTY: New highs incoming; 27500 can be cycle highs

NIFTY the index from India which holds the top 50 stocks in India. IN the chart below we have overlayed the SPX index. The NIFTY and $S&P500 have been in lockstep for more than 5 years as shown in the chart below. The indices are just 2.5% away from their ATH. Even with these levels the RSI for NIFTY is 61 and 58 in case of $SPX.

The RSI is far from overbought condition. So, this rally which started in NIFTY can have more legs. With Global liquidity on the rise and RBI easing policy rates the NIFTY can reach its all-previous highs of the Fib retracement levels. The previous peak was 0.786 Fib retracement level which on this upward sloping chart can be as high as 27500 which can indicate another 10% upside.

Verdict : Stay long $NIFTY. More upside possible. RSI still not overbought.