Nifty trend / Nifty prediction 28th March 19
Nifty trend was very choppy today and in the first part of the day Nifty was higher however in the second part of the day there was a sudden sharp sell-off and many traders were looking out for what news had hit the market but that’s not important for the time being. Based on my Nifty trend / Nifty prediction we don’t see Nifty moving much higher from current levels though there could still be some more upside however from a portfolio standpoint it will be prudent to get onto as much cash as possible there are many events that are lined up and markets could be in for a nasty surprise so keep that in mind.
For the past few days we have discussed many parameters that we see going against the market and hence our view is to be on to as much cash as possible from a broader market perspective. So today we can take a look at the price charts. Nifty corrected from highs of 11750 to 10000 the fall was very sharp and now the pullback that has started from 10000 levels has taken much more time than the fall and hence we see this up move as a corrective wave (there could still be some more minor upside I am not disputing that ) however beyond that up move we do not see Nifty sustaining higher. If we take a price chart analysis there are multiple resistances around 11550-11760 area and there are also some major gann resistances just above 11760 so we don’t see Nifty sustaining on the higher side.
Good trading to you!
Part of what we sent to our clients today morning
Many of you are asking me about how and when the Nifty will top out and from where we see sharp declines and why I am saying this for the past few days repeatedly. So let me try to explain this
Firstly, —- transit through S—- historically has always created a major top so when —– moves into S we see markets moving higher and making a top and towards the end of the transit we see a top is in place (in most cases once mid point is crossed the top is in place). —– rules optimism and exaggeration so currently we are seeing the same massive optimistic theme playing out in the market wrt to election rally and this was one of the reason why we were aggressively bullish at around 10,000 levels because at that point in time —– had just activated its move into S so as most of you know we did make good money in some stocks like icici, ptc etc but the point is that whenever historically this transit has taken place we always have seen markets rallying based on euphoria and making a top and then reversing very sharply for e.g. last time this took place was in 2007 so world stock markets rallied made a top in end of 2007 when —– was about to exit S and then fell hard. The same theme was seen even in 1995 and in other cases also and even now this theme will play out so keep that in mind.
So why does this theme play out? The answer is that when this transit occurs the markets become over-optimistic about everything and ignore the core facts till the midpoint of the transit is in place and once the midpoint area is crossed the realities start to kick in. So even now the markets are in the same phase like that of 2007 and everyone is bullish and everyone is talking about why they should invest in the markets even at current levels so in short there is massive optimism and in reality the on-ground economy is actually in a collapse mode so if you take sheer numbers for segments or any vertical all the major indicators are showing massive slowdown both globally and locally so this kind of a slow down will not allow Nifty to sustain higher especially when the valuations are at lifetime highs and also at significant premium to other emerging markets. This is just an understanding for you as far as —– transit is concerned.
Now, coming to the immediate rally that has been underway. This rally has broken out above 11000 (which was the higher end of the trading range) just on the day Mercury went retrograde. So Mercury rules communication and information and when it goes retrograde especially in the sign of Pisces it creates an illusion that all is well and has very high correlation to false breakouts so since the breakout is on the day Mercury went retrograde we see that the current move is nothing but actually a false breakout above 11000 and eventually the breakout will fail keep in mind mercury will end its retrograde tomorrow and resume normal orbit by the end of this week so expect the false breakout and illusion that all is well to end soon.
In addition to these factors which may seem abstract to many but even if we just simply look at trailing valuations we are at 28.30 almost and we don’t see this valuation sustaining higher and as history shows that each time the markets have been at hefty valuations markets have always fallen sharply. Will keep updating as and when anything needs to be done.
Bottom line there could still be some more upside I am not saying that’s not possible but we don’t see Nifty sustaining higher and reversal is on the cards. Get on to as much cash as possible and wait for lower levels to invest. Money is made by buying cheap and selling expensive not by buying at any price so wait for cheaper levels to come.