What is the past record after eight days of a continuous rally? The odds favour a rise
The Nifty index closed today 47 points higher at 5,647, marking a consecutive rise for eight trading sessions in a row. The last time this feat was achieved was from 21st March to 31st March 2011, which came after a gap of nearly three and a half years. On that occasion, the Nifty dropped on the 9th day. But what does past data tell us?
This is the 44th time that the Nifty has risen eight days in a row since July 1990, and on 56% of these occasions the index has continued the positive trend. Going by historical trends, the chances are that the Nifty may continue its positive trend tomorrow.
Moneylife did a study on the past performance of the Nifty and found some interesting patterns in the data. In the last 21 years, there have been just 43 instances of an eight-day rising trend. The current rise is the 44th. In 19 out of the 43 instances the Nifty was unable to sustain the trend. On the 43rd occasion (in March 2011) the index dropped by 7.7 points on the ninth day (1st April 2011) then again gained 82.4 points in the next trading session.
Though the circumstances on the previous occasions were different, could the Nifty close in the positive tomorrow? The data indicates that this is possible, but much will depend on global cues.
The last time the Nifty recorded a nine-day rise was in September 2007. On that ocassion, the rally continued for 10 days before it closed 2.15 points lower on 4 October 2007. On the last 19 occasions when the trend was broken, the Nifty fell by an average 16.25 points.
History appears to be in favour of the index continuing in positive territory tomorrow.
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