Monday, August 12, 2013


Hi Friends,

After making series of higher highs and higher lows throughout 2012 Nifty has finally made a lower high and lower low Indicating a Bear Market. However, this is late realization of Bear Market. While Index Topped out in 3rd Week of May 2013 Broad Market already Topped out in 1st week of Jan 2013. While Nifty/Sensex lost only 12% Small & Mid Cap Stocks, PSU Banks, Infra, Metals etc. are 30% to 50% down from their 52 week highs. So basically Nifty is not reflecting a True Picture of Broad Market as Stocks and Index are not in Sync.

I had been warning about possible Market Top since late Dec 2012. And had been mentioning about possible decline to 4500 on Nifty since then. Though Nifty haven't dropped to 4500 yet, many Small & Mid Cap Stocks and even Blue Chip Stocks have dropped to 4500 and 3500 levels of Nifty. Some Blue Chip Stocks like BHEL, DLF, IDBI, JP Associates, SAIL, Tata Steel are near 2500 level (2009 lows) on Nifty..

Short Term -

In my recent post I mentioned about alternate Count of Running Triangle on Nifty which had support near 5630 level. However, Nifty has Invalidated that Count as it broke below important mark of 5600-5570. So I would stick to my preferred Wave Count. 

In my previous post near 6000 in July I had mentioned about minimum possible decline to 5430. Nifty has almost achieved Wave Equality and it has Support of Parallel Channel near 5460. As long as Nifty holds this Support a Huge Bounce back to 5860 or even 5930 can be expected. For this initial indication would be  break above 5660.. This Bounce could be very sharp and might take bears by surprise. However, this would provide another shorting opportunity for a larger fall later in Sept-Oct..

The Oversold Sectors Like PSU Banks, Metals, Infra etc. might help to push Index Higher. Even though these stocks are likely to fall more later in the year; some huge bounce might be on cards to pull these stocks from oversold zone. In Desi Terms - "Mare Huo ko aur kitna Maroge??.."

Long Term -

Though a in short term there might be a pullback in Market, I would like to stick to my Bearish views for next 12 months. Looking at the damage done to the Broad Market someone would ask which stocks will take Index to 4500 levels. Well when I mentioned about 4500 levels on Nifty, I had a view of about 40-60% decline in most of the stocks. Many stocks are already down about 30-50% and they are likely to fall more. Index is still at 5500 level due the some heavy weight stocks which are still at highs. So in next 12 months even if Index doesn't fall to 4500 level. It is expected to touch at least 4900-5000 and may trade sideways to down over a year. If Nifty has to Fall to 4500 or lower heavy weight stocks like HUL, ITC, HDFC, HDFC Bank, Infosys, TCS, RIL, SunPharma, Tat Motors etc. will drag Index lower.. These stocks are expected to fall 30-50% over next 12 months..

Thanks & Regards,

Harsh Dixit.