Beware!! Markets may crash within Next 1-2 months

#1
Hi Folks,

Everybody is going "Gung Ho" about the current rally and are expecting the market is going to pick up new highs like the way US market is going on right now. But better beware or hedge your investments to avoid becoming a scape goats for FIIs.

Everything rosy has been put across saying we are under valued, we are going to make new highs, market consolidating etc etc. But what has changed so far that got up nifty from 5100 to 6300++ in a matter of 2 months????

In fact nothing big. I will come with point by point:

1. It started off with Change of RBI Governor where it was 5200 and all the way it went on to 6300 within just 2 months. What had made a drastic change there. Its just a old wine in a new bottle. Only the tone of the Gov has changed than compared to the earlier one. He gave one or the other essence in balancing. His first speech was just a eye washer saying that he will clearly focus on the inflation and CAD. And he did not cut the rate just to make it more Rosy. Now he is balancing it by increasing Repo Rate and giving a comfort level in some other areas. However no effort has been put by the Govt to bring down the inflation. This is just a manipulation whenever inflation is getting out of control, they alter that and show a better number to convince the markets and investors. Even if the inflation is getting out of control, there was no CRR hike which was cut very badly in the last few years. If that's going to be done, will the current ruling party get the funds to fight for the next elections? May be some of you find it absurd. Let me come to next point.

2. Results season. All the analysts have deliberately put in lower bench marks anticipating the drop down in the businesses in such a way that majority of the companies show results which are surely better than those lower bench marks / estimates. Bringing in confidence to the investors and pull in retail investors to have their profitable exits.

For example, with the way SBI have come up with the results, there is no point to cheer about. But to the surprise analysts were glad about its Q2 performance saying its NPA have not worsened (Bad is better than worst!!!) and the stock has been shooting up. I am sure this stock is going to be beaten down to below 1600 by this month end. No surprise if it goes below 1550 as well. I am already holding 1600 puts in bulk quantity. But hedged too to get on to the safer side. My strategy is 3:1 where 3 is on the short and 1 on the longer side. And SBI will test its previous lows before December end. Don't want to sell my strategy though. Moving on to the next point.

3.FIIs are the biggest players here. And the easy money they are able to make in Indian Markets is much more than they make it anywhere else. If you look at the pattern from past 6 months - every month they are moving the markets drastically. Say at least the Nifty is in a range trading range of 600-800 points every month most of the times. That gives a plenty of opportunity for them to mint money for them. If you consider this months Nifty range - Its not much now...may be a range of 300-400 pts now. Still half a month left. High probability that it goes down only rather than up. Below point justifies that.

4. All the world markets (specially US) are getting tired making highs everyday and are getting into overbought territory. With the holiday season nearing by from 3rd week of November till January, all the fund managers my unwind their positions leading to good or massive corrections. Also the Fed Tapering (God & Obama knows when actually is Tapering planned...but people are minting money on that name...sometimes they fear tapering nearing and crash the markets and at times they say tapering never nearing until March) and spike the markets. Their strategy could be exit on highs (who knows the tapering begins while they are holidaying) :cool:

Contrarily in Indian counter part, Market at its peak despite NO GOOD SHOW in fundamentals and economy. Moreover, elections nearing by and anything can happen meanwhile. Its better for FIIs to book the profits exit and return back during Jan-Feb and play the game of election outcomes when the scripts become cheap. Sincerely speaking that's the good time for the retail investors like us to start building our portfolios whenever there is a big correction.

My sincere suggestion to the people who are thinking of starting to invest if nifty goes above 6300-6400, please hold your horses and accumulate your money till the correction happens. That time you can buy 2 at the price of 1 which is costing now. For already who have invested and reaped the fruits, better pluck half of them and put in your kitty if you are ready for the risk. Specially with the stocks that are going all time highs which have reluctantly spiked on the name of Defensives. Or at least hedge your investments now to avoid repenting later.

BEWARE OF THE CRASHES!!!

Note: My intent is not to harm anybody's feelings or intentions but to just a put a word of caution to the pity Aam investor who may burn their hands in this period. That's how I did while in 2008 and those scripts are now meager prices - like GMR infra, Punj Lloyd, HDIL, Unitech, DLF, RIL, BHEL, IVRCL, Orchid Chemicals, etc etc. to name many...But ofcourse, some of them like TCS, Sun Pharma, etc to name very few are at higher levels now. Trade off is I was at loss.

Few charts as per my understanding which says there is a correction ahead. I may not be technically correct though. Experts to judge and guide.

My view on the charts, Nifty and SBIN are getting into H&S pattern on daily charts where the steep fall anticipated in SBIN is massive. Like it could goto levels of 1450 or below. However if it closes above 1800 it could be a stop loss.

Nifty on the other hand could get down to the levels of 5700 or below based on the H&S pattern on daily chart.

Bank Nifty is on perfect 'M' pattern on weekly chart and could see a correction upto 8900 or below on a pessimistic note; on an optimistic note, it could get down to 8500)
 

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a1b1trader

Well-Known Member
#2
My view on the charts, Nifty and SBIN are getting into H&S pattern on daily charts where the steep fall anticipated in SBIN is massive. Like it could goto levels of 1450 or below. However if it closes above 1800 it could be a stop loss.

Nifty on the other hand could get down to the levels of 5700 or below based on the H&S pattern on daily chart.

Bank Nifty is on perfect 'M' pattern on weekly chart and could see a correction upto 8900 or below on a pessimistic note; on an optimistic note, it could get down to 8500)
Hi Kishore

Agreed in totality

There are patterns indicating Bank Nifty to 8500 and Nifty to 5500 -5100 and may be even lower.
 
#3
Kishore Sir, I am not able to see the " M " pattern in your image.

Can u kindly repost the where i can see M.

By the way I found something, pls correct me sir.

 

stock72

Well-Known Member
#4
It is a natural process for stock market to reach new highs and got crashed and then to move on ...nothing new ..and to find out when crash will happen just watch main stream news paper for news like investor added xx lakhs crore in their portfolio , expert says sensed will cross 40000 etc .there we need to be alert .
 
#5
Kishore Sir, I am not able to see the " M " pattern in your image.

Can u kindly repost the where i can see M.

By the way I found something, pls correct me sir.


Hi Moolan,

I was talking about the 'M' pattern on weekly charts of Bank Nifty.

On nifty daily charts its possible Head & sholders pattern. In that what i sense is nigty could go upto 6200-6250 and could get a pull back. Once it goes blow 5900 we can see a breskdown to 5700-5500 levels. Pls correct me if i am wrong
 
#8
That is true. Excellent analysis and information that was put here. The main point of observation where is the factor that led to such drastic improvement in stock market prices? Absolutely no genuine factor and that too without the improvement in fundamentals how can this be stable? So at any time collapse is inevitable.
 

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