One of the reasons many people are worried on the market: How overextended it looks?
The fact: Yes Nifty and market are overextended and you can see this on chart. Lot of people call it overbought.
The Nifty Daily Chart
Just look how far 200 day moving average is from current market state. The 200 dma is 18% away from current market price. When market gets this extended - then its natural for people to get cautious on market. Overextended market does not mean sharp correction. It only means slow and uncertain gains in future.
Here's another observation: Market can remain overbought for extended period of time. Overextended market corrects themselves by just trading sideways and letting moving averages play the catch up game. Looking at the current state: it would be healthy for market to trade sideways and digests its gains. Will that happen? We will wait and see.
The blogpost is purely for educational purpose.