From the lows of 21,964 on March 4, the Nifty 50 index has gained over 1,200 points, reclaiming the mark of 23,000 and narrowing its losses from the peak. You can read more about the top contributors to this recovery here.
In a note on Friday, March 21, Balanco wrote that Nifty’s break above the 50-DMA on Thursday was accompanied by its first “breadth buy” signal since 2023.
A breadth thrust signal fires when the percentage of Nifty 50 stocks trading at or above their four-week highs reaches 55% or higher.
“There have been 38 breadth thrust signals since 2002; Thursday’s is the 39th,” Balanco wrote.
The CLSA chartist went on to mention that historically, post such a phenomenon, the average returns over a 30, 90 and 250-day period have been gains of 3.8%, 7.8% and 13.4% respectively.
The 30-day return test has been successful 76.3% of the previous instances, while the success ratio for the 90 and 250-day period in similar events earlier has been 73.6% and 81.5% respectively.
Among stocks, Balanco has recommended buying index heavyweight ICICI Bank, which is trading close to its 52-week high of ₹1,362.
Shares of ICICI Bank have gained 7% over the last month, reversing their losses to turn positive on a year-to-date basis as well.