Smallcaps in India have not had that stellar a move as the largecaps. Infact most people have the same complaint – Nifty is at an all time high but our portfolios are down.
The reason for this is smallcaps are the last to rally. They normally rally after the largecap index has made a move and starts consolidating. Our analysis is the same is about to happen. See the chart of Nifty Smallcap Index below:
The smallcap index has been consolidating and has formed a good base. A move above the orange line which is around 6000 will be a good bullish sign. Once we take out the blue line which is a significant previous top, we are ready for new highs.
The above chart is the 60 min chart of the Smallcap index. The moving averages have aligned. History shows that once the 144 moving average is above the 610 moving average in 60 min charts, the stage is set for potential bullish moves ahead.
To put things in perspective Smallcap Index fell from 9600 to 3300 and is still around 6000. So it has a long way to go to catch up with the Nifty which is at an all time high. This space is bound to get more exciting!