Taming of the BULL-Crash of 21 Jan 2008

[karthikmarar]

When Pankaj start his great posts it is bearish time again... no need to look at the sensex or nifty to tell

Welcome back , Pankaj... nice post again...

regards

Karthik

 

[pkjha30]

When Pankaj start his great posts it is bearish time again... no need to look at the sensex or nifty to tell

Welcome back , Pankaj... nice post again...

regards

Karthik

Hi Karthik

Thanks a lot. You would have noticed that this post is started post-crash.
The reason being with multitude of tips and tricks flying around and with so many experts banging members with their knowledge of TA exhorting them to invest in this and that stock, a word of caution goes unheeded.

But when members hit upon an extremely rough patch , there is a need for other voices to tell if India par se is doing good or bad and if there is still hope for recovery.

Frankly, barring elections in 2009 and FII manipulations I don't see a reason why India would not perform better in the long run.

Market is but one aspect of Indian Economy though India is not yet fully divorced from or integrated into global economy. Sooner or later market has to move up from these levels. In my opinion 25000 or so will be achieved. This is a prelude to shake weak hands.

Nobody in his right senses imagined a target of 21000 withing one and half year of crash to below 9000 in May 2006.

This time also trends will be analysed by many to see if LT Primary Trend is broken indeed, which I doubt very much.

Second reason is that events beyond crash need to be documented in the forum so that others may benefit in future.

I may not be able to spare enough time like last year, but others are welcome to post freely with facts and opinions and discussions.

pankaj

 

[Venkat123]

Can we short stocks in India? I know we can buy short term options.

 

[Saint]

Nice thread,Pankaj!

Good to have you back in action,my friend.

Saint

 

[swagat86]

gr8 work Pankaj, i was goin thru the threads and all ic is viewpoints, which dont matter.

Its the markets which we have to follow.



Nice 2 cu back.

 

[pkjha30]

Well what matters in the market most is Viewpoints which cumulatively decides the trend.Valuations and Technicals are for normal times.
Else how does one justifies outrageously high PEs for some stocks , even when it is not listed(Reliance Power). Fundamentals are non existent and technicals are not available. Even in some stocks which are already trading for long, sustained high PEs are not justified even by their past performances(Ispat or Essar group of companies). Ultimately when viewpoints turn negative trend reverses.

If technicals supported over bought positions for a month or so, nobody bothered to point out or discuss those things.

Edited::
Here I want to correct myself.
Mr Romanov did predict the crash.
http://www.traderji.com/145941-post17.html
I tend to agree and reiterate that 25000 will be next stop for senxex when FIIs turn positive. Retail Investors don't hold key to market.

AS far as I know it is FII action which holds the key. O several occasions markets have been in overbought positions but it continued to get up and move on.

The fisrt alarm signal , as far as I am concerned was in October 2007. How ever a more recent article by Badri Narayanan in Business Line (on 6th Jan 2008) had pointed to this ominous trend

FIIs trend

Cumulative FII positions as a percentage of gross market positions on the derivative segment as on January 3 were 36.43 per cent (39.26 per cent on December 27).

FIIs continued their selling last week as well in the F&O segment, particularly in stock futures. However, they remained net buyers in index options, suggesting that they expect volatile conditions to be in force. They now hold index futures worth Rs 21,722.35 crore (Rs 20,812.38 crore) and stock futures worth Rs 52,615.36 crore (Rs 49,220.34 crore). This indicates that they have added fresh short positions on index as well as stock futures.

I have very little understanding of FNO side and could only understand the implications of Short Positions by FII may be ominous.

I feel it may be better if somehow we could find such details and analyse it further we may understand market better.

Secondly, FIIs have been net seller for Month of January, how ever they have remained net buyers till date. Their overall investment figures are much more than we could really imagine. So it is unlikely that they would allow the market to tank beyond a certain point. Someone in the forum had pointed out in a thread that FIIs have entered market at various levels and keep booking profits. May be it could be analysed when FIIs have been net positive in their action on spot and futures side or where they are hedging.

Lastly, like all crashes, Market does not give time to investors or traders to make a proper exit based on stop losses. Stocks either get locked in lower circuit or margin calls force you to exit at the lowest.And traders & short term investors get hit most in such situations.

I am sure there will be calls to take short positions. As retail investors rush in to cash last leg of rally and get hit, similarly those taking short positions at this stage may also get badly hurt. Time to take short position was when FIIs were taking it.

Just watch when they take long positions and start entering in your select stocks based on market leadership, growth outlook, low PE and profits etc. This is just for those who take long term investments.

pankaj

 

[rsatheesh2002]

Well what matters in the market most is Viewpoints which cumulatively decides the trend.Valuations and Technicals are for normal times.
Else how does one justifies outrageously high PEs for some stocks , even when it is not listed(Reliance Power). Fundamentals are non existent and technicals are not available. Even in some stocks which are already trading for long, sustained high PEs are not justified even by their past performances(Ispat or Essar group of companies). Ultimately when viewpoints turn negative trend reverses.

If technicals supported over bought positions for a month or so, nobody bothered to point out or discuss those things.

AS far as I know it is FII action which holds the key. O several occasions markets have been in overbought positions but it continued to get up and move on.

The fisrt alarm signal , as far as I am concerned was in October 2007. How ever a more recent article by Badri Narayanan in Business Line (on 6th Jan 2008) had pointed to this ominous trend



I have very little understanding of FNO side and could only understand the implications of Short Positions by FII may be ominous.

I feel it may be better if somehow we could find such details and analyse it further we may understand market better.

Secondly, FIIs have been net seller for Month of January, how ever they have remained net buyers till date. Their overall investment figures are much more than we could really imagine. So it is unlikely that they would allow the market to tank beyond a certain point. Someone in the forum had pointed out in a thread that FIIs have entered market at various levels and keep booking profits. May be it could be analysed when FIIs have been net positive in their action on spot and futures side or where they are hedging.

Lastly, like all crashes, Market does not give time to investors or traders to make a proper exit based on stop losses. Stocks either get locked in lower circuit or margin calls force you to exit at the lowest.And traders & short term investors get hit most in such situations.

I am sure there will be calls to take short positions. As retail investors rush in to cash last leg of rally and get hit, similarly those taking short positions at this stage may also get badly hurt. Time to take short position was when FIIs were taking it.

Just watch when they take long positions and start entering in your select stocks based on market leadership, growth outlook, low PE and profits etc. This is just for those who take long term investments.

pankaj

Well said Sir.

Regards,

 

[pkjha30]

Thanks Saint for kind word for a novice

looks like market will cross previous crashes in percentage terms and fill the gaps ever since last build up.

Your one line sums up everything more than any other analysis or viewpoint.
"Go with the Flow Always......"

pankaj

 

[pkjha30]

There seems to be some merit in Udayan's argument

One thing, which needs to be kept in mind though is that a lot of the money is still locked in the Reliance Power IPO. HNIs will get their money back most of it will go off to the banks or where they have borrowed the money from but FIIs will get a large part of money ten days later around USD 11 billion that is a large amount of money. When USD 11 billion comes in to the market with a market, which has fallen 20% off peak and many stocks have fallen 25%-30% maybe that money starts buying into stocks but that money has to come back.



So I think liquidity is constraint right now both from HNI perspective and particularly from the FII perspective and once that USD 10-11 billion comes back in early February, maybe we will see some of this liquidity situation getting alleviated a little bit otherwise difficult to see where that sucker will come from the liquidity perspective.

 

[sudoku1]

There seems to be some merit in Udayan's argument

dont rely these cartoon channel guys......a two mouth policy.....
rely on urself only....
till sensex is below 18500.....no place 2 hide for the bulls.....!!!!