Nifty Nifty

Bloomberg pointed out that among all the impressive breadth readings across the world, India's Nifty 50 index is sporting among the best.

The data go back to 2002, so looking at all other times that at least a third of stocks in the index were overbought and outside their upper Bollinger Band, and at least 95% of them were in uptrends, there were only 2 precedents. Both led to hefty losses over the next 2-3 months then saw the uptrends resume.

If we relax the parameters to 30% of stocks overbought and outside their volatility bands, and 90% in uptrends, then it was a similar pattern - more short-term follow-through, with some medium-term pullbacks to work off the overbought conditions, and double-digit gains over the next year.