NIFTY Realty Index: Uncovering Recent Technical Breakouts

The NIFTY Realty Index has recently exhibited notable relative strength compared to the broader market. A significant technical development on the weekly charts has caught our attention.

Analyzing the weekly chart of the NIFTY Realty Index (NIFTYREALTY), we can discern a pattern that emerged following a corrective decline that was initiated at the 560 level in November 2021. In March of this year, the index formed a minor double-bottom support around 370.

Subsequently, the index broke out from this pattern and ascended, revisiting its previous high of 560, ultimately forming a double-top. After a brief consolidation period, the Realty Index has now executed a classic breakout from this double-top pattern, a move spanning nearly 23 months.

While some technical retracement towards the breakout level of 560 cannot be ruled out, it’s imperative to note the significant observation arising from this substantial technical development: as long as the NIFTY Realty Index remains above 560, the breakout remains valid and influential.

A deeper dive into the Relative Rotation Graph (RRG) reveals intriguing dynamics within the NIFTY Realty Index components. Stocks such as IBREALEST and SOBHA are currently displaying robust rotations, positioned far from the center point. This suggests they have the potential to generate alpha in comparison to the benchmark.

Furthermore, we anticipate promising performance from other stocks within the realty universe, including OBEROIRLTY, BRIGADE, and MAHLIFE. These stocks are expected to exhibit superior relative performance compared to their peers in the Realty sector going forward.

It’s essential to approach these observations with a prudent mindset, as financial markets are inherently unpredictable. The aforementioned analysis reflects a viewpoint rather than a definitive recommendation. Investors are encouraged to conduct thorough research and exercise discretion when making investment decisions in the dynamic landscape of the NIFTY Realty Index.

Milan Vaishnav, CMT, MSTA
SEBI Regd. No. INH000003341