Do it yourself

Recent interaction with the market participants indicates that the sentiment of fear is now strongly dominating greed. Most of the investors/traders are complaining of pain in their respective portfolios. Indubitably, the portfolio values have corrected noticeably from their September 2024 high levels. However, the damage is far less as compared to the previous major bear market, which lasted for almost thirteen months (2008-2009), followed by a 20-month period of recovery (March 2009-November 2010) and a three-year period of consolidation (November 2010-October 2013). We had a tentative two-year market cycle between 4Q2013 and 1Q2016, before the latest proper bull market started at the end of February 2016. Notably, this bull market has been the longest one (8 years); and it is still not certain that it has ended on 26 th September 2024. Pain-check In my view, the pain from stock price corrections could be of two types – absolute and emotional. Absolute pain occurs whe...

The benchmark Sensex has recorded its new all-time level today, surpassing its previous high level of 63583 recorded in early December 2022. Nifty50 is also few points from its previous highs. In the past six months, since December 2022, both the indices have taken a huge swing of over 10%. Optically the markets may appear flat for the past six months, as the benchmark indices are almost unchanged; but a deeper dive would indicate that many material shifts have occurred in the market during this period of six months. For example- ·           Nifty50 is almost unchanged for the past six months, Nifty Midcap100 has gained over 9% and Nifty Smallcap100 has gained over 7% in this period. ·           The sectors that led the markets to new highs in the post Covid period, i.e., IT Services, Pharma, Energy and Metals have actually yielded negative returns in the past six months; while the FMCG sector has ...

The bench mark Nifty is trading above the psychologically important 10000 mark after three months. The benchmark had slipped below the 10k mark on 12th March 2020 exactly after two years. It last traded below this mark for couple of days in March 2018. The date 12th March 2020 is important because, this was two week before the nationwide lockdown was announced. At that time the confirmed COVID-19 cases were less than 300; much lower than anywhere in the world, and there were no travel or business restrictions in place. The market panic was mostly due to the problems brewing in the debt and commodities markets. The earnings disappointment was persistent and economy had shifted to slow lane many quarters ago. Obviously, the correction in Indian equities from the all time high level recorded on 20 January 2020 had started without much regard to the socio-economic displacement caused by the outbreak of COVID-19. In fact, on 23rd March Nifty closed at 7610, about ...

The sentiment on the street eerily looks similar to the one we saw during 2HFY09, post collapse of Lehman Brothers. In those days, the rumors of large banks declaring bankruptcy, sovereign defaults, imminent EU breakup, market freeze, sounded absolutely believable. These were not only market grapevines believed by the common investors. Many senior analysts at global investment banks wrote scary reports about these eventualities. Globally reputable, economists and strategists pained doomsday scenario of global economy slithering into a deep abyss to compete with the great depression post WW-I. In India, many depositors transferred money from private banks to the public sector banks. Investors summoned their advisers for details of their liquid fund portfolios. The fixed maturity plans (FMPs) backed by bank CDs were pre redeemed by paying penalties. Capital protected structured products were also called prematurely by incurring material losses. Some of the readers have l...

In past few months, a large number of prominent market experts have publically stated that the present phase of market correction is perhaps the worst they have seen in their life time. Many of them have recently indicated that the Indian equity prices may be close to their bottom and a recovery is imminent. In view of these assertions by the prominent market personalities, I find it pertinent to examine, whether equity prices are close to hitting the rock (if not hit already). For me, the most successful, though intuitive indicator of market bottoming is the dominance of "fear" over "greed". The phenomenon is usually reflected by a combination of the following three factors: (a)    Sharp underperformance of broader markets as compared to the benchmark indices, for the current market cycle. (b)    Materially negative market breadth for the current market cycle, indicating capitulation of large number of non institutional investors. ...