I have been hearing about the Indian stock markets and the economy for quite some time. With so many people saying many different things, I thought I will try to give it a shot and see what I come up with. With due apologies to people from my home land: udayan, amartya, here I go.
My guruji told me recently that the Chinese markets have been down 20% in less than a month. Once the bears in China head towards the poles and bulls in the china shop in Spain come to India and US, there will be a surge in the DOW towards the Nasdaq and the NIFTY towards the Sensex.
Considering that
1. Readers Digest US business is heading for Chapter XI (Bankruptcy).
2. Jobless rates have increased and GDP growth has decreased in the US.
3. Q1 results in India have been good.
4. Inflation in India is at all time low.
5. Monsoon has failed in india.
6. With the recent fall in markets indices across the world, Gold has fallen from about $1000 to about $935/oz.
we have a situation where different factors point in different directions.
As my guruji points out, when the bears are exhausted and wont sell, the bulls sell in order to book profits. Now when a bull sells, who is buying? It has to be a bear. What does it mean?
When a bear is exhausted, he ends up buying. And when a bull is exhausted he ends up selling. We reverse our stances when we are at our wits' end. Hence at that point in time the same market behavior continues as usual except that the bulls play the bear's role and vice versa. Pause for a moment and reflect on this point.
The fundamentals seem to point all over the place just like in the Maruti advt. where people point out the location of the nearest Maruti Service Center. Fundamentals currently dont provide any clue. A lot depends on how the US markets do today and the far eastern markets tomorrow. Each one will depend on the other one for a cue. There is apparently a double top with a single bottom also.
Finally, the markets will be determined by the behavioral pattern of the investors. If they choose the buy option instead of the sell, the sentiment will be bearish (remember that now the roles of bulls & bears have been reversed).
The role reversal also creates an identity crisis since the bears wont know whether they are now bears or bulls. Being at one's wits' end is rather subjective, hence we cant exactly track when a bull becomes a bear.
Having said that, let's see what will happen tomorrow. Tomorrow being Thursday and guruji's turn to cook, sentiments will be negative at home and elsewhere. I expect the market to open below today's close. There is a support at 4034.5 and at 16420.2. We expect both Sensex and Nifty to be range bound between the above figures.
I hope I have brought some clarity into the otherwise murky subject of market behavior.
Its a jungle out there.
My guruji told me recently that the Chinese markets have been down 20% in less than a month. Once the bears in China head towards the poles and bulls in the china shop in Spain come to India and US, there will be a surge in the DOW towards the Nasdaq and the NIFTY towards the Sensex.
Considering that
1. Readers Digest US business is heading for Chapter XI (Bankruptcy).
2. Jobless rates have increased and GDP growth has decreased in the US.
3. Q1 results in India have been good.
4. Inflation in India is at all time low.
5. Monsoon has failed in india.
6. With the recent fall in markets indices across the world, Gold has fallen from about $1000 to about $935/oz.
we have a situation where different factors point in different directions.
As my guruji points out, when the bears are exhausted and wont sell, the bulls sell in order to book profits. Now when a bull sells, who is buying? It has to be a bear. What does it mean?
When a bear is exhausted, he ends up buying. And when a bull is exhausted he ends up selling. We reverse our stances when we are at our wits' end. Hence at that point in time the same market behavior continues as usual except that the bulls play the bear's role and vice versa. Pause for a moment and reflect on this point.
The fundamentals seem to point all over the place just like in the Maruti advt. where people point out the location of the nearest Maruti Service Center. Fundamentals currently dont provide any clue. A lot depends on how the US markets do today and the far eastern markets tomorrow. Each one will depend on the other one for a cue. There is apparently a double top with a single bottom also.
Finally, the markets will be determined by the behavioral pattern of the investors. If they choose the buy option instead of the sell, the sentiment will be bearish (remember that now the roles of bulls & bears have been reversed).
The role reversal also creates an identity crisis since the bears wont know whether they are now bears or bulls. Being at one's wits' end is rather subjective, hence we cant exactly track when a bull becomes a bear.
Having said that, let's see what will happen tomorrow. Tomorrow being Thursday and guruji's turn to cook, sentiments will be negative at home and elsewhere. I expect the market to open below today's close. There is a support at 4034.5 and at 16420.2. We expect both Sensex and Nifty to be range bound between the above figures.
I hope I have brought some clarity into the otherwise murky subject of market behavior.
Its a jungle out there.
when the bears are exhausted and wont sell, the bulls sell in order to book profits. Now when a bull sells, who is buying? It has to be a bear. What does it mean? It means that the bears have bought and covered thier positions, and one cannot expect anymore buying support from them. It also means that everyone is more on one side which is of the buyers and we all know that all buying is equal to all selling, so when there is not enough to sell there is a bubble formed because of speculative demand with little or no supply, which ultimately bursts and brings the markets down..
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