SGX Nifty 27th July 2016

SGX Nifty

LTP  8,576.00   -128.00   -1.49% High 8,710.00 Low 8,546.50

SGX Nifty

Error parsing: Query returned empty response

SGX Nifty 27th July 2016

SGX Nifty / Nifty Futures today was seen consolidating. As per our Indian stock market analysis maintain  our overall view that Nifty is headed much  lower from current prices and we expect a resumption of the bear market that started on 4th March 2015. If we look at the overall structure it is amply clear and we are not in the camp while believes that Nifty is headed for much higher levels from current prices. 

Valuations across global stock markets have reached levels near that of highest ever in history. If we look at our markets with respect to the Bank Nifty we are almost at valuations or very similar valuations to that of Jan 2008. At that time we know that Banking stocks plunged from those valuations and fell anything between 50-80 percent from the highs. Since we clearly believe that history will repeat itself as W D Gann said there is nothing new under the sun and future is nothing but a repeat of the past cycles. We expect a sharp bear market to begin mostly lead by banking stocks but we will confirm that at a later stage. At this juncture banking stocks have all the ingredients needed for a massive top to be formed. We have no doubt in our mind that Banking valuations have reached a froth level and we are ow expecting a major fall lead by them. Both private sector banking and public sector banking must be totally avoided in portfolios as we do not see the bottom of the NPA cycle done yet. We expect significant problems still remaining in the Indian Banking system.

VIX index is another indicator of major problems and it shows that global stock markets are very complacent at this juncture. When we look at our VIX charts and we compare them to the valuation charts we have seen very high probability of Nifty and global stock markets always falling significantly from those levels. The VIX is showing a picture in line with what we are expecting. It paints a picture as if everything in the global front is ok and there are no problems existing in the system but in reality growth is tepid and earnings reported till now are showing a dangerous picture. Even when we look at the current picture from a forward PE multiple we clearly see that these valuations are unsustainable.

Overall charts are indicating that the current move is in last stages and now we will see the resumption of the bear markets. Our targets are significantly lower from here and frankly our targets are unimaginable to most today. We see a global risk on collapse coming and we have no doubt that it will not. The global risk off is coming when it does begin most people will be stunned by the magnifier of the fall. Please understand that I am not saying this today because I am short or have a prejudice for shorts but we had predicted at 7000 levels that first a massive tezi / pullback cycle and then bear / mandi cycle will resume. So what we are saying now is nothing fresh it will be a ongoing move that started on 4th March 2015. It is not a new move or a new mandi cycle but rather a part of the same cycle that started on 4th March 2015. Please keep that in mind.

MSL has been doing very well and I hope you have enjoyed the rally till now. We have done some adjustments to our investments today as our outlook going forward for broader equities is not that good. 

Good Trading To You!