Nifty Follows A Scripted Path - Comforting Situation

In the wee hours of last Monday, I had scripted a chart  for Nifty for the complete year 2019  in my last blog post. Idea was to test my understanding of the behavior of Indian equity market going forward. By doing so we will be able to gauge whether this understanding stands the test of time. At any juncture if we find Nifty deviating from the charted course, it will serve as an alarm bell and we can then carry out mid course correction.

So far in this week Nifty has done exactly as scripted. I had opined that Nifty will be range bound between 10500 and 11000. You can revisit my last blog post here Indian Equity Market View For Year 2019


In today's trading sessions, Nifty had reached level of 10930. If my script has to play out, tomorrow Nifty should be travelling southwards. Permabulls may please take note of this and try to be careful in tomorrow's trading session. Do not get carried away by the strong Nifty recovery in today's late afternoon trade from 10845 to 10930 level. Nifty finally closed today at 10905.

Why should Nifty fall tomorrow? It could be for myriads of reasons like Brexit woes, China slowing or market participants getting weighed down by domestic political risks. When the actual destabilizing news finally percolates down to retail investors, action would have already taken place in market. We will only be scrambling for cover. That is where my scripted chart will help you to be cautious. Keep referring to it for future guidance.

As per the strong form of Efficient Market Hypothesis, market is totally efficient with market prices quickly adjusting to reflect all types of information, both public and private(inside) information. This basically means that both technical and fundamental analysis of stock market is useless and investing/trading in such market is like throwing darts (random walk theory). With my script on Nifty's future path for the year 2019, I wish to debunk this theory.

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Indian Equity Market View For Year 2019

Nifty index is the bellwether for Indian stock markets. Tracking Nifty will essentially give us insight into expected behavior of Indian equities. It is the beginning of year and hence is good time to track Nifty.

Nifty is presently in sideways move, displaying very low volatility. It is expected to remain within the range of 10500 to 11000 for the next couple of months. That is primarily due to the upcoming General Elections and market participants are in no mood to fully commit themselves either way.

What Happens After March

After March things will crystallize to a large extent as to whether present incumbent NDA has the upper hand in the upcoming elections or not. Let us analyze the two outcomes :-

1.  NDA Has Upper Hand : In that case you will see Nifty drift down to 10300 level. That will be for accumulation purposes for big market players. In other words, if you find Nifty at 10300 level in April, you may safely assume that NDA is going to win the elections, since the big boys of the market think so. Hence you should also accumulate stocks if you find Nifty at 10300 level in April.
2. NDA Does Not Have Upper Hand :  In such a scenario you will find Nifty racing to 11200 level on low volumes. This means that movers and shakers of markets are expecting NDA to lose the elections and hence are carrying out the process of distribution of stocks. Hence you should also sell major part of your portfolio if you find Nifty at 11200 level at the beginning of April.

What Happens after the Elections

In case NDA wins the elections you can expect Nifty to make new highs beyond its all time high of 11760. But in case NDA loses then it is going to be be one hell of a slide down into a bottomless pit. I would not be surprised if we see 7000 level in Nifty if NDA loses the upcoming General Elections.

Your Views

Do express your views on the subject in the Comments Section. With your views we may be able to understand this beast named equity markets better!!

In case you have any queries, do post them here and I shall be happy to get back to you. Watch this space for I shall be updating you at appropriate moments as Nifty makes its moves going forward.

Happy trading and investing!

What's in Store for US Markets in 2019 ?

Last week Dow Jones Industrial Average (DJIA) closed just shy of 24000. This gave Dow an impressive 2.6% gain from the start of the year 2019.

What next is the million-dollar question that begs an answer? I am going to provide some insights which should answer this question.

Forecast for Next Week

Come Monday, DJIA should see a steep drop. It will be due to the patience of the market participants running out over Federal Shutdown. Thereafter there will be volatility for the week with DJIA visiting levels above 24000 and below 23000.

Forecast for Month of January

The month of January will present a good opportunity for traders to profit from going long from sub-23000 level. From this level, there is an excellent chance of profiting until the level of 25000. This may not be achieved fully in January, but certainly, by February we can see 25000 in Dow.

Forecast For First Half 2019

The first half of 2019 will be spent in volatility with Dow between levels of 23000 and 25000. I would expect the bias in this yo-yo journey to be southwards, but this can be said with certainty as the action unfolds. I am basically saying that Dow will be moving sideways for the first half of 2019 between the levels of 23000 and 25000. However, jubilant reactions to some unexpected good news may allow Dow to reach levels of 26000.

Forecast For Second Half 2019

The second half of 2019 will see either continuation of sideways movement with southwards bias or an effort to reclaim the level of 27000. High probability is the former case of slow Southward Drift so as to be positioned for a good sell-off by 2020 -2021.

Here the reason lies in the inversion of US Treasuries' Yield Curve of 2-year and 5-year maturities. Now market participants will be keenly watching the yield curve of 2 yr and 10 yr maturities which is presently flat with narrow yield difference of 17 basis points. This hints that the yield curve of these papers has a high probability to invert anytime in future.

Early Signals if Dow Movements were to Differ From Above Forecasts

Let us now list the various early signs that will tell us that Dow will behave differently from what I am predicting:--

1. If Dow fails to reach 25000 levels and violates 22000 levels on a closing basis, then we will see much lower levels in 2019.
2. Alternatively, if Dow crosses above 27000 levels on a closing basis, then new highs will be made.
3. If the sideways movement takes place between levels of 22000 and 24000, then we will find Dow at lower levels than 22000 in 2019.

Seeking Views

I have charted the entire Dow movement for 2019. Anyone wishing to seek the detailed reasons for each of these forecasts is most welcome to do so in Comments Section and I shall be delighted to provide the reasons.

I shall also be updating you on weekly movements as and when appropriate. Your views will be highly appreciated by me and other readers. Your views may provide some new insights from which all of us may benefit.

Keep trading in 2019 with profit!

Trump's Era - Why Is He Not Your President?

First we witnessed widespread and sometimes violent protests saying  "Trump is not my President". Then there were protests to allow "Illegal Immigration" to carry on unchecked in US. Close on its heel came protests against "Travel Ban" from seven countries to US.

Then Michael Flynn had to resign from post of National Security Adviser due to leak that he had spoken to a Russian diplomat, Sergey Kislyak.

Now pressure is being applied for resignation of Attorney General Jeff Sessions for having spoken to the same Russian diplomat.



Phew! that's quite some action for Trump-bashers to orchestrate in such a short span of time. But you already have inside information on Illegal Immigration and Travel Ban through my post

Trump's Era - Acts to Save Democracy For Future Generations

As for conversing with Russians, you have the low down in my last post

Trump's Era : Target Real Enemy States, Not Russia

Now let us understand the logic behind screams of "Trump is not my President" in US and other world capitals. And that is exactly what we are going to do today. 

To begin with, let us ask some straight questions to these protesters. And if they cannot answer these questions honestly, then they should eschew their unreasonable demand for Trump to step down. Here we go :-

1. If a democratically elected leader is not your President, then who do you think should be your President - Army Chief, CIA Chief , Fed Chief or some Chieftain of your tribe? What twisted undemocratic logic, coming from those who plan to save US !! Will someone please tell them that US is the world's oldest democracy, and such wishes have no place in a democratic setup.
2. Why were the protests happening even while Trump was taking oath of office? At that point in time, Trump had not signed any executive order or trampled any democratic value or violated any constitutional law. Then why, why, why? That reeks of well orchestrated plan set in motion by some shadow power. We may dwell on that at some later date.
3. Do the protesters want Hillary Clinton, who lost the election to Trump, to be officially declared the President? In that case they have to first make amendment to Constitution to read thus " US Government will henceforth be of the protesters, by the protesters, for the protesters. Silent majority will have to remain passive spectators"

Think it over. This thinking exercise is meant both for the protesters and silent majority. After all it is your country and you have to decide whether you want to continue breathing in  a democratic setup or in a messy anarchic cauldron that the protesters are seeking.

Protest as much as you like, democracy allows for that. But at least protest with some democratic rationale. You cannot protest for removal of a democratically elected leader, just because silent majority endorses him and you do not. 

Time to wake up and spread the word!

Trump's Era : Target Real Enemy States, Not Russia

What is this hullabaloo about US official talking to Russian counterpart? What on earth is wrong in engaging with Russia? Is Russia an enemy state which is trying to wage war with US? Has  Russia made any attempt to invade US through conventional or proxy war? If not, then how is Russia perceived to be an enemy state for US wherein Russians are considered anathemas?

Let us analyze in detail the questions that have arisen here. But before that let's draw your attention to my last blog-post which analyzed the controversial decision of President Trump on Illegal Immigration and Travel Ban . You may like to dig out facts here in Trump's Era - Acts to Save Democracy For Future Generations

Russian Untouchability  

President Trump has rightfully declared that he wants to establish cordial relations with Russia. It takes courage as a US politician to go against long held popular bias and negative sentiments about Russia. Surely such intentions cannot be construed as a populist move!

It is high time to bust this myth about Russia being an enemy state to US. Consider the following myth busting facts and then form your own opinion :-

1. Russia is not USSR and we are not in Cold War Era. Today Russia is as much concerned about maintaining peace and harmony in the world as any other right minded democratic country. It has shown remarkable commitment to fight terror with commendable success.
2. On the contrary, NATO is Cold War Era outfit which needs urgent overhaul to meet the challenges of present day geo-political realities. It should throw out member countries with proven record of links with terrorist organizations. Time and again Russia has given enough proof to world, for NATO to act against its terror-linked member countries. But nobody cares! Now tell me, who is acting against world peace - Russia or Arms Lobby controlled NATO ?
3. Russia is just another democratic country, maybe with an extra dose of national pride and identity. But what is wrong with that? Open ended left liberal Democracy needs to evolve with time into something more meaningful that caters for national interest also. That is the only way forward for Democracy to survive. If not, we will soon find present democratic countries hurtling towards becoming chaotic regimes like those in Middle East and most of Africa.

Russia Vs Saudi Arabia

What is so democratic about Saudi Arabia that US loves? In the same vein, what is so undemocratic about Russia that US avoids like plague? Glance through the following revelations and decide for yourself :-

1. Both Saudi Arabia and Russia are separated from US by Atlantic Ocean and hence pose no geographical boundary threat. However, by propagating and funding Wahabi/Salafi ideology, Saudi Arabia has helped create many terrorist organizations/regimes. Wahabi/Salafi ideology is the most radical form of Islam known to mankind. By that yardstick Saudi Arabia should be anathema to US, but is its closest ally in Middle East. Russia has no such radical proclivity and yet is perceived as enemy state. Don't you find that hypocritical?
2. Russian and US scientists cooperate in many technological fields to make life on earth better for mankind. On the other hand, Saudi interaction with US has always been to find ways to expand its regional power through blackmail or machinations of Machiavellian dimensions.
3. Russia helps regimes in their fight against ISIS, as does US. On the other hand, Saudi Arabia provides clandestine financial, material and moral support to ISIS while condemning them with forked tongue.

Do you still want to fault President Trump for trying to initiate better relations with Russia? President Trump is trying to align democratic forces, without any bias. He does not carry any baggage of past hostilities and is genuinely trying to make America Great again. But that upsets very powerful vested interest groups who had earlier managed to corrupt previous US administrations, and we all know that. Ever wondered how ISIS and Clinton Foundation are both funded by Saudi regime? More on that some other time.

If you think differently from what has been said in preceding paragraphs, do pen down your thoughts in 'Comments' section and we shall discuss your point of view in the next blog-post. But if you agree, then do lend your support wholeheartedly to President Trump's efforts to make US safe, secure and Great again. That will help European nations to wake up and smell the coffee, thereby helping democracy survive. We owe at least that to our future generations!.