I guess one question that is troubling everyone right now - How much more upside Nifty offers from current levels? Because the answer to the above question will determine the level of participation by market participants.
If we go by history - not much. We are pretty much at the peak atleast for time being. The market can crack pretty much in no time from current levels.
In last bear market, it was not the 200 dma but 200 week moving average which worked as an obstacle to the rally. Will it be the same or different this time? Only time will tell. But let us look at the history on what it offers.
Nifty weekly chart during last bear market:
As you can see in the chart above, Nifty tumbled below 200 week in April 2001 - and then it rallied to 200 week ma only to sell off again. Nifty made a sharp decline from 1200 to 850 in approx. 4 months - decline of 29%. Then, from lows of 850 - Nifty rallied 41% to hit 1200 again. [point a to point b rally of 41%]
After achieving the target - Nifty began drift down, made a higher low and then double bottom around 930. Nifty then managed a strong rally - this time to even cross above 200 week ma. It was the begining of the new bull market…
Nifty in this bear market.
If 200 week ma is the mean of this bear market also…Nifty is pretty much there. Interestingly, this time also from lows, Nifty has rallied 42% to reach near 200 week ma. If this is not a new bull market and just reversal to the mean rally - Nifty may not have substantial upside from current levels.
Apart from 200 week ma, 3800 will also offer stiff resistance as it was the support level which Nifty broke post Lehman bust in September. [Trading Rule: When a support gets broken, it becomes a resistance]
Every market phase is different; and there is no guarantee that things will work out the same as it did in 2001-2003. But apart from history, fundamentals and economic environment also suggests that market may be nearing its peak. There is a limit to which a technical momentum can take market to….
Remember: Market has a mind of its own and it will do what it has to do. We can only make educated guesses based on current environment and history as a guide. Lets see what market has in store for us 
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