Buy This Under-Rated Instrument for 2025
By Brijesh Bhatia (@bbrijesh9/X)
Pune, 5th January 2025: The stock market can often feel like a game of timing—getting the right stock or instrument at the right time. While the broader market indices often garner the most attention, it is crucial to recognise that hidden gems often lie beneath the surface, waiting for their moment to shine.
The year 2024 ended on a positive note for the Indian stock market, with the Nifty50 benchmark index posting a solid gain of 8.8%. However, what went largely unnoticed by most traders was the remarkable performance of the Nifty Next50, which outperformed the Nifty50 by a wide margin, surging by 27.45%.
What is the Nifty Next50?
The Nifty Next50 index, a key barometer for mid-cap and emerging stocks, comprises 50 companies that are next in line after the Nifty50 in terms of market capitalisation. While not part of the elite Nifty50, these companies represent the growth engines of the Indian economy. The index includes sectors like consumer goods, healthcare, technology, and industrials, offering exposure to some of the country’s fastest-growing businesses. Many of the stocks in this index have demonstrated strong potential for growth, making it an attractive investment for those looking to diversify beyond the top 50 companies in the Nifty50.
Despite its impressive performance in 2024, the Nifty Next50 remains under the radar for many investors who continue to focus primarily on the Nifty50.
Can the Rally in the Nifty Next50 Continue?
The big question now is – can the Nifty Next50 continue its upward trajectory into 2025?
To answer this, let us analyse the technical aspects of the index and assess the trends that could point to further gains.
Source: TradePoint, Definedge Securities
Looking at the chart of the Nifty Next50, it’s clear that the index is trending in a “higher high, higher low” pattern, as per Dow Theory. This is a bullish sign, indicating that the market is in a positive trend, with each successive peak surpassing the previous one and the dips finding support at higher levels.
While the market doesn’t move in a straight line and often experiences retracements, it’s important to note that these pullbacks are part of a healthy trend.
Currently, the Nifty Next50 is taking support at the 200-Day Exponential Moving Average (DEMA) Channel. This channel is plotted using the 200DEMA (High) and 200DEMA (Low), and it serves as a key level for assessing the trend strength. The fact that the index is holding above this critical moving average level, coupled with the formation of a potential double-bottom chart pattern, suggests that the bullish momentum could resume.
Another key indicator to watch is the Relative Strength Index (RSI). The RSI, which helps identify overbought or oversold conditions in the market, has recently turned up from oversold levels. This indicates that momentum is shifting positively, adding further confidence that the Nifty Next50 is setting up for another rally. Given the combination of these technical factors, the case for continued bullish momentum is strong.
How Can You Buy the Nifty Next50?
For investors looking to tap into the potential of the Nifty Next50, one of the most straightforward ways to gain exposure is through Exchange-Traded Funds (ETFs) that track the index. The Nippon India Nifty Next50 ETF, also known as Nippon Junior Bees, is one such option. This ETF tracks the performance of the Nifty Next50 index and offers an easy way for investors to participate in the growth of mid-cap stocks in India.
Nippon Junior Bees
Source: TradePoint, Definedge Securities
On the technical charts, the Nippon Junior Bees ETF shows a lot of promise. Using the Daily 3% X 3 Point & Figure chart, the ETF has broken out from a Bullish Turtle pattern, signalling a strong bullish trend. A Bullish Turtle pattern is considered a reliable indication of an upside breakout, and the current price action suggests that the ETF is poised for further gains.
Currently, the ETF is trending in the “O” column after breaking out from the Bullish Anchor Column, indicating a retracement phase. Retracements are a natural part of the market cycle, and as long as the ETF holds above its support levels, the overall trend remains bullish. A breakout above the Anchor column high will confirm the resumption of the bullish momentum, and investors can position themselves for potential upside.
How to Buy the Nippon Junior Bees ETF?
The process is simple for those interested in purchasing the Nippon Junior Bees ETF. You can buy the ETF through your Definedge Securities Demat Account. Definedge Securities offers a seamless trading experience, allowing you to access the ETF and make investments easily. The ETF provides an efficient and low-cost way to gain exposure to the Nifty Next50 index without having to pick individual stocks.
Disclaimer: The purpose of this article is only to share interesting charts, data points and thought-provoking opinions. It is NOT a recommendation. This article is strictly for educative purposes only. As per SEBI guidelines, the writer and his dependents may or may not hold the stocks/ commodities/ cryptos/ any other assets discussed here. However, clients of Definedge may or may not own these securities.
(About Author: Brijesh Bhatia has over 18 years of experience as a trader and technical analyst in India’s financial markets. He is a well-known face in the business channel as a Market Expert and has worked with broking giants like UTI, Asit C Mehta, and Edelweiss Securities. He is currently a Senior Research Analyst and Editor at Definedge.)
