Nifty Prediction top looks imminent and on a reversal confirmation we will look to short sell target 9511 Nifty
Many of you have been asking where will this rally end and why will Nifty come lower to 9511? Well let us look at past euphoric markets and we will be able to understand this better. This is the 4th time in recorded history for our stock markets that we are seeing such a phenomenon. The past 3 instances were in 1992 where scam broke out then in 2000 when the dot com bubble burst and the last one was in 2008 when the global financial crisis started and when we compare today’s moves and 1992,2000 and 2008 we see similar price moves occurred in each of these years with same ingredients which made a major top.
First of these were sentiment which was extremely bullish. There was record retail participation and everyone from the pann walla to every single person everyone was talking and trading the stock market. The same phenomenon is being seen now we have been receiving record phone calls saying in how much time can my money double or which stock to buy for next few months or please give me a multi-bagger tip and so on the bottom line is we are seeing the same bullish retail sentiment indicators that have been recorded around tops of 1992, 2000 and 2008 needless to say that markets collapsed that time and I believe that this time also it will not be any different. Even if we look at the FII numbers there is massive money and sudden euphoric buying by the FII’s for the past few weeks. Generally, this sudden euphoric buying also has to lead to major tops being formed. So while many of you keep saying that if FII’s are buying why and how will the markets come down? But the point if we see the FII numbers closely whenever there has been sudden massive selling we have seen bottoms being formed and whenever we have seen sudden massive buying we have seen tops being formed. You can backtest this for yourself and see however just for a case in point in March this year FII’s sold 65000 CRS in one month and that was the bottom for the markets. They have done almost 65000 of buying so this does qualify as a sudden spike buying which historically has led to major tops being formed. Just to give you a few more examples of this in Nov 14 Fii’s bought almost 11,000 CRS which was far higher than the past few months and 2 months later we had a top just 300 points higher from Nov levels. Jan-Feb 16 Fii’s sold 25000 CRS which was a panic selling and that formed the lows from where we started the massive rally in stock market similarly Oct 18 FII’s sold 30000 CRS and that was the bottom for our markets. The point being that FII’s don’t alone drive the markets and when we see extreme panic/selling from them in short duration or extreme buying and euphoria by them in a short time frame we have seen tops and bottoms being formed so coming back to the present scenario there has been sudden spike euphoric buying by the FII’s and that means historically we are near a major top. Please keep in mind there are additional parameters needed to filter this and cannot be used as a standalone indicator but for sure this will show pure euphoria and fear and whenever most of the market participants are euphoric that has been the top which is in the present scenario.
Besides sentiment indicators which are showing a major top being in place, we also have valuations as a parameter that have been extremely stretched. Once again I go back to the year 2000 and 2008 (I do not have data to show you backtested results for 1992) trailing PE has never traded above 30 for our markets in the past however this time we as of today have a trailing PE of 37 which in the past has never happened so what we did do is add some more sub filters to the PE with more fundamental parameters like pb, div yield, market cap to gdp, absolute market cap and a few more which I will not get into discussing now but the combination of few additional parameters also have given us the top when backtested for year 2000, minor top of 2006 the major top of 2008 sub-top of 2012, sub-top of 15, and also the top of this year so the combination of these additional parameters also show us the more or less the major top will be formed around these levels may be a few more hundred points on the Nifty but major top will be formed around these levels.
Sorry for being technical and using some jargon in this para. I have tried to explain this as simply as possible. In addition to these factors if we look at Neo wave which also forms yet another part of the analysis currently we are in an irregular wave B (the author of neo wave theory also says that this is an irregular wave B) so although we have seen fresh 52 week highs or all-time highs in the market this actually is a pullback of the fall that we had in Jan to March. For those who would like more details on this please google and read about irregular wave B and if this is an irregular wave B then the implications are that we will go to 9511 and then eventually to 8200 (I am considering a super optimistic outlook assuming a wave C failure) so that’s the reason I am saying we will review at 9511 but if wave C does play out in entirety we will see 7211 also which is possible but for the time being let us just work with 9511. I know this sounds and looks impossible as of now but at 7511 to 8000 levels we were predicting 10600 also on the basis of wave B and currently, we are not done with wave B. So broadly this is what I see a top around these levels and then a fall to 9511 and then we review there we will see 9511 and I do not have any doubts about it and eventually, from 9511 or 8200 or 7211 we will start a super cycle for 23856 so keep that in mind. The bottom line is we will see probably a lower low or a double bottom or a slightly than March ’20 and then start a massive rally for 23856 but that rally will come only after the wave C which will take us to 9511 and then 8200 or maybe even 7211.
Last but not the least I may be ridiculed, abused or I don’t know what more however I am telling you what I see. In Jan ’20 I did see a major fall and did not know the reason and told to get to 100% cash on portfolio and the same goes with buying aggressively at 8000-7511 for 10600 min on the higher side. We did make great money on the buying side from lower levels. Some may say we booked out early but the point is we did make 55% flat which is one of the best returns in this sort of a year. Also, 70% of the stocks that we got out from the levels we got out are lower from our price exits, and frankly, from an investment perspective, I am not in the business of catching tops and bottoms it’s better to make safe gains than risk investment capital.
if you are only trading on the basis of this post please use your own risk management and then only trade. Please do not over trade and always keep your risk in check at all times.