NIFTY MONTHLY CHART
NIFTY QUARTERLY CHART
NIFTY QUARTERLY CHART
The worst fears have come true and the market had decisively broken the 17000 support and is now heading towards 14500 -14000 levels. This is 38.2% retracement of the entire rise form 2939 to 21200. As the rise was meteoric the fall will also be colossal. From the monthly chart it becomes very clear that the market had broken the channel it was in since start of this market rally. The most pessimistic target form here is in the range of 11500 – 12000. Looking at fundamentals of our economy even if market falls to those levels, I don’t expect market to sustain there for long time period.
This is a first major correction since the start of bull market since 2003. There is huge difference between correction of January 2008 and May 2006. Global economy was on much more sound footing during May 2006 and sub prime ghost was not hunting the market. Right now the global scenario is much grimmer rather worse than it was in 2001 or back in 1997. This is a major systematic failure of market in pricing the risk (It resembles to what it was during the systematic failure of 1987) and eventually we all have to pay for it because of integration of financial markets. Sorting out of this mess will take time and therefore, I do not expect the market to resume its northward journey anytime soon. It may take six months or a year before market will be able to cure itself and start moving on fundamentals. But right now markets are moving on sentiments rather than fundamentals and sentiments can take market to any levels. Just as at 21000 our markets were overvalued but still we were trading at that level just two months back similarly, 14000 or 11000 may be an unjustified price for our markets but we may see that level.
This is a first major correction since the start of bull market since 2003. There is huge difference between correction of January 2008 and May 2006. Global economy was on much more sound footing during May 2006 and sub prime ghost was not hunting the market. Right now the global scenario is much grimmer rather worse than it was in 2001 or back in 1997. This is a major systematic failure of market in pricing the risk (It resembles to what it was during the systematic failure of 1987) and eventually we all have to pay for it because of integration of financial markets. Sorting out of this mess will take time and therefore, I do not expect the market to resume its northward journey anytime soon. It may take six months or a year before market will be able to cure itself and start moving on fundamentals. But right now markets are moving on sentiments rather than fundamentals and sentiments can take market to any levels. Just as at 21000 our markets were overvalued but still we were trading at that level just two months back similarly, 14000 or 11000 may be an unjustified price for our markets but we may see that level.
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