Nifty stocks on uptrend but technicals point to a pause in the rally

Extended breadth is not the only signal that India's equity rebound may have run too far too fast

The equity rally in India has been so broad that almost every stock in the benchmark is in a technical uptrend. But if history offers a guide, that could point to an upcoming pause.

A whopping 98% of stocks in India’s NSE Nifty 50 Index were trading above their 200-day moving average this week, a level used by technical analysts to determine whether a stock is in an uptrend. The last time India posted such an extreme reading was in July 2014, which was followed by a correction in September that lasted longer than a month.

India's Nifty 50 Index has 98%