Nifty Views

on 2nd Oct, 2009

“It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side.”

Jesse Livermore

“It takes a man a long time to learn all the lessons of all his mistakes. They say there are two sides to everything. But there is only one side to the stock market; and it is not the bull side or the bear side, but the right side.”

Jesse Livermore

Observe the chart from Jan 2008 till today….

Observe the chart from Jan 2008 till today….

2

Now follow the lines…. No waves….No mathematics…..

Simple previous peaks and troughs….

Now follow the lines…. No waves….No mathematics…..

Simple previous peaks and troughs….

Observe the developed pattern carefully……What can you see? Well, I can see something peculiar…

Observe the developed pattern carefully……What can you see? Well, I can see something peculiar…

Now……Observe the points…..Isn’t it well placed between the

classical supports and resistances ??? Notice each such points between the

lines……..

Now……Observe the points…..Isn’t it well placed between the

classical supports and resistances ??? Notice each such points between the

lines……..

Now observe the mid-vertical line. Doesn’t the right hand side look like a mirror image

to that of the left side

Now observe the mid-vertical line. Doesn’t the right hand side look like a mirror image

to that of the left side

Possible???? YES….If that’s the game being laid out….

Possible???? YES….If that’s the game being laid out….

Thus we observe the following….

• A typical mirror image being developed in Nifty.

• The mirror reflections holds true for both price movements and time taken to achieve the levels.

Thus we observe the following….

• A typical mirror image being developed in Nifty.

• The mirror reflections holds true for both price movements and time taken to achieve the levels.

Considering the above pattern, it may be possible that Nifty will actually move towards the previous all time high of 6350 by Jan 2010, following the reversal pattern as charted out after touching lows of 4500 first, thus reversing all the losses that happened because of US problems in 2008. If that happens, then both the bulls and bears will have an equal footing in Indian Markets.

Considering the above pattern, it may be possible that Nifty will actually move towards the previous all time high of 6350 by Jan 2010, following the reversal pattern as charted out after touching lows of 4500 first, thus reversing all the losses that happened because of US problems in 2008. If that happens, then both the bulls and bears will have an equal footing in Indian Markets.

Recap of the last few articles

Now, in my last 2 articles at www.saptarshimandal.com, I had said that Nifty was due for a correction till 4550 and maybe 4200 as well. That was following different wave patterns. Obviously, there were 2 or 3 different views published over the last 2 months. I had actually given all possibilities and the precise Nifty movements in each of the possibilities. One of them which said a target of 5050-5120 by the 1st week of Oct has got achieved. Refer to the article “Maybe its a buy till Oct and then go.....” published on Tuesday, August 11, 2009…..

It may be noted that I had entered into a positional short a bit early but we were completely hedged once Nifty crossed 4930. Now we have positions with Nifty shorts and longs in specific stocks in the Pharma, Telecom and FMCG sectors. We missed the last wonderful rally in PSU Banks where we entered when no one bothered to touch it but also exited early. Even we have sold OTM call options in Oct and Nov series, which more than made up for the MTM losses in Nifty.

Current Possibilities

Probably new longs will get attracted once Nifty comes close to 4930 or 4800 but their stops will again get triggered with Nifty coming towards 4500. At 4500, once of the bearish waves will get completed and also that way, the mirror image formed in Nifty will remain intact. [Refer to the point of 4500 in slide no. 6 and see its image point created in mid March 2008.] From there, we might move towards the previous highs of Jan 2008. (Please note that this logic is an hypothesis for guidance only and should not be considered as the final bible).

Current Possibilities

Probably new longs will get attracted once Nifty comes close to 4930 or 4800 but their stops will again get triggered with Nifty coming towards 4500. At 4500, once of the bearish waves will get completed and also that way, the mirror image formed in Nifty will remain intact. [Refer to the point of 4500 in slide no. 6 and see its image point created in mid March 2008.] From there, we might move towards the previous highs of Jan 2008. (Please note that this logic is an hypothesis for guidance only and should not be considered as the final bible).

• From here we might fall to 4925 first, if 5050 breaks. Otherwise we can go to 5170 and then fall towards 4925 zone.

• Then again an upmove towards 5250, if 4925 holds and then the major fall to 4500.

• After that we might see the massive rally towards the Jan 2008 highs

Foresight

After reaching the highs of Jan 2008, we might move into a consolidation zone for a period of 1-3 years, creating a 1993 type situation. People who thought a big consolidation at the bottom and then a slow recovery may actually see that type of consolidation at the top where both bulls and bears will have equal strength. During this period, US markets might move into newer lows while Nifty will probably move in a broad range of 4500-6500 but the election GAP will not be bridged.

If that happens, then our Nifty will become decently valued at 20-25 PE of FY2011-12 (Currently trading at 22.89). With that the technical base of a broad 2000 points in Nifty will act as huge support for the next upmove in the ongoing bull phase. That upmove in Nifty should be the matured phase of Indian Bull Market and move towards 11000 to 12500 by 2015. By that time, Indian Market will also see drastic fundamental changes in sectors like Power with the advent of nuclear power generation and related infrastructure.

Foresight

After reaching the highs of Jan 2008, we might move into a consolidation zone for a period of 1-3 years, creating a 1993 type situation. People who thought a big consolidation at the bottom and then a slow recovery may actually see that type of consolidation at the top where both bulls and bears will have equal strength. During this period, US markets might move into newer lows while Nifty will probably move in a broad range of 4500-6500 but the election GAP will not be bridged.

If that happens, then our Nifty will become decently valued at 20-25 PE of FY2011-12 (Currently trading at 22.89). With that the technical base of a broad 2000 points in Nifty will act as huge support for the next upmove in the ongoing bull phase. That upmove in Nifty should be the matured phase of Indian Bull Market and move towards 11000 to 12500 by 2015. By that time, Indian Market will also see drastic fundamental changes in sectors like Power with the advent of nuclear power generation and related infrastructure.

In many of my previous articles, I had written that the election GAP will never be filled because that separated the bulls from bears and had created a Continental Reversal Pattern. This theory should hold true, if India has to become a developed country and a major economic power.

Long Term Investment Ideas

Investments should be preferred in a combination of equity and commodities. In equity, the preferred sectors will be Power, Pharma, Airlines, Consumer Durables. The net increase in per capita income will move into spending for a better lifestyle and care. Healthcare will get redefined in India and that seems quite possible by their price movements on charts. Airlines, which has been neglected worldwide, is expected to become the next multibagger with stocks like Jet, KFA, Spice, etc giving 10-15 times return in the next 5 yrs. On commodities, silver will be the preferred investment idea than Gold.

Long Term Investment Ideas

Investments should be preferred in a combination of equity and commodities. In equity, the preferred sectors will be Power, Pharma, Airlines, Consumer Durables. The net increase in per capita income will move into spending for a better lifestyle and care. Healthcare will get redefined in India and that seems quite possible by their price movements on charts. Airlines, which has been neglected worldwide, is expected to become the next multibagger with stocks like Jet, KFA, Spice, etc giving 10-15 times return in the next 5 yrs. On commodities, silver will be the preferred investment idea than Gold.

Thank You