Pre-election rally: Can Nifty hit 24,000 in March? Here's what history says

The BSE Sensex has gained on an average 7.7 per cent in the month of March in the last three general election years. Will history be repeated?

Indian equity benchmark indices have been scaling record highs in recent trading sessions on the back of positive global cues, hopes of interest rate cut in the US and economic growth optimism.

Analysts also attribute the upbeat mood in the markets to hopes of BJP-led Modi government regaining power at the Centre in the upcoming general elections this year.

A closer look at the market data, in the past three election years, reveals a very promising picture for the benchmark indices in March 2024.

If history were to be repeated, the NSE Nifty can scale mount 24,000 and the S&P BSE Sensex zoom past the 79,000-mark this March itself. Here's why.

In the last three elections years, the S&P BSE Sensex has logged hefty gains in the month of March - the month when election dates are announced. This year, the Election Commission is likely to announce the Lok Sabha election dates on March 13. 

 

Back to the markets, in March 2009 the Sensex had rallied of 9.2 per cent, followed by a 6 per cent gain in March 2014 and 7.8 per cent in March 2019. Thus, the BSE benchmark has yielded an average positive return of 7.7 per cent in the month of March during an election year. 

The average March returns jump to 9.4 per cent, if the particular month's high is taken into consideration. For e.g., the Sensex hit a high of 10,127 in March 2009 - and was up a whopping 13.9 per cent when compared to the February 2009 close of 8,892. 

Thus, in a way, if the markets repeat the historical trend based on the average monthly net returns and intra-month highs. The S&P BSE Sensex can possibly end the month around 78,000 and the Nifty around 23,675. On the other hand, basis on the average intra-month gains in the previous election years March, the Sensex can potentially rally to 79,300 levels and the Nifty to 24,050.

Here's what charts suggest

Technically, the Nifty 50 index has bounced back after testing support at its 20-DMA (Daily Moving Average) last week. The 20-DMA now stands at 22,050-odd levels, while the Nifty is seen testing resistance around the higher-end of the Bollinger Bands on the daily chart around 22,480. CLICK HERE FOR THE CHART

The long-term chart suggests that the Nifty needs to sustain consistently above 22,420 levels for a stronger momentum to emerge. 

Key momentum oscillators on the daily and weekly chart paint a mixed picture, thus hinting of a possible volatility ahead. Momentum oscillators on the daily time-frame are in favour of the bulls, whereas the same are showing signs of tiredness on the weekly scale.

Thus to conclude, the Nifty needs to sustain above 22,420 on a consistent basis for further gains. In case, the Nifty fails to hold above 22,420, the index could drift back towards the 20-DMA at 22,050 levels.

A breakout on the upside could see the Nifty spurt to 22,678. On the other hand, a breakdown could trigger a slide towards 19,500 levels, suggest charts.

As per the monthly Fibonacci chart, the S&P BSE Sensex can gyrate in the range of 70,900 - 74,100 this March. On the upside, the index can potentially rally to 74,300 and 75,600 levels.