i Develop Stocks Advisory

Courage Courage and Courage....
Is this the end of the Bull market or unfolding a new Bull market…?

Market had reached open interest of Rs 56000 crs in May 06 which was that time thought to be of highest order of overbought condition and market collapsed on the day RPL stock got listed. It crashed from 12600 to 8900 which was sizable erosion in the market capitalisation and industry felt that it was an end of a BULL ERA….

No way, market stood back and entered into a new Bull orbit. New big ticket IPO’s came and got listed directly in the F & O segment plus regulator felt the need of expanding volumes which made them double the size of futures. All set and started roaring and slowly the O I went to Rs 132000 crs.

On plain reading, even above Rs 100000 crs market was looking overbought where some entities started building short positions but market was not ready to budge. The single most factors which was responsible to hold the markets was RELP issue of 3 bn USD. Though it was known to market at first place that huge funds will get transferred to RELP issue the crash was never destined in the normal circumstances.

The reasoning is very clear because India which was a clear case of de coupling of US sub prime effect which in fact had happened in July 2007 ( market reacted in Aug 2007) and hence by and large it was considered as fully factored in. In fact, most of the industry captains went on record that India is the only market where the mitigated losses could be covered by the global players. Then what went wrong……?

The Indian MF has come of age and become a matured industry with its size rising close to 100 bn USD plus was sitting on comfortable cash. However comfortable were they, they could not avoid the temptation of subscribing for the pie of RELP issue. For the first 3 days the issue was subscribed to the extent of 25 times which went on to 80 times which also signifies that ADAG gr too has left any stone unturned to make this a big success and in the process their excess liquidity which was generally used for treasury operations seems got stuck with the wind.

It seems, the situation was very closely watched by BEAR camp who had lost huge money when the gets going became tougher for them and was just waiting for this kind of opportunity. Suddenly global clues went wrong which otherwise could have been controlled by BULLS with a volatility of 1000 to 1500 points which is being seen in every vallan close to rollover session. They themselves use some international trigger and make us aware that no de coupling has taken place.

They started the game as usual but this time the BEARS waiting in wing had different ideas. They broke the back of bulls and allowed the system virtually fail by triggering stop losses of Hedge Funds to begin with, operators and retail off course without saying. This was implanted in the biggest ever drop in O I from Rs 132000 crs to Rs 62000 crs in matter of 4 trading sessions and crash of 5000 plus points.

The attack was in futures this time hence the figures of FII selling Rs 3000 crs or 9000 crs did not attract notice of many. It seems bears had done huge homework where the Bulls can go wrong and planned the affairs in such a manner. It could also be true that some big name must have taken hit of couple of bn USD to create such havoc which could be used for his long term plans.

Nothing is impossible in India. If Pak terrorist can reach PARLIAMENT of India, market terrorist can break the system too.

The only concern on hand is that whether this is the beginning of the bear phases or unfolding of a new bull market….?

The Hon’ble PM and FM and reiterated that there is no change in economic fundaments and the current crisis is due to global clues clearly suggest that this is certainly not a beginning of a bear market. It is for sure an unfolding of a WAVE V of the Bull market with a new SENSEX target of 38000 by Dec 2009.

The views expressed is just a thought process of Mr Chakry and has no conclusion of a bear scam or evidence of such a scam. Logically you may find confirmation only when Nifty crosses 6600 in next 2 months.

Every deep correction has unfolded a new BULL market and this time it is not an exception. This is because the commodity Bull run will last till 2012 and so the equity bull run and if you look at it from other angle FII may sell 3 to 5 bn USD stocks but they are not here to make complete exit. Eventually they want to raise they share in Sensex market capitalisation to close to 60% no matter if they have to invest another 100 bn USD for that.

Market may test lower levels before 31^st JAN in volatile moves and investors will do well by not going aggressively long in F & O whereas for cash stocks this is the best time because you can’t make the top and you can’t make the bottom.

Courage is what it takes to stand up and speak. Courage is also what it takes to sit down and listen.