15thAugust,2014
If you examine last 30 years History data from 1984 till date.
In that I found some MIND BLOWING facts “AFTER EVERY GENERAL ELECTIONS SHARE
MARKETS DOUBLE FROM ITS BOTTOM”.
In 1984, Congress came in to
power under the leadership of late Mr. Rajiv Gandhi. Before Elections Sensex was
just 270. After elections it went up to 650 by February 1986. It was more than
double.
In 1989, Mr. V.P. Singh came in
to power. At that time sensex was 680. After formation of new government and
presentation of budget by Socialist leader late Mr. Madhu Dandavate Sensex
reached to 1602 (from 680 to 1602).
In 1991, Mr. P.V. Narsinharao became
the Prime Minister and Mr. Manmohansingh became the Finance Minister at that
time sensex was around 1950 and with in six months sensex doubled i.e. from
1950 it became 4546 it was labeled as the Harshad Mehta boom.
In 1998, Mr. Atal Bihari Vajpayee became the P.M. at that
time Sensex was 2740 it rose to 6150.
In 2004, Mr. Manmohan Singh became
the P.M. at that time sensex was around 4,200. In five years sensex shot up to
five times i.e. 4,200 to 21,000.
In 2,009 after Loksabha Election
result Both B.S.E & N.S.E. got upper ( Buyer ) circuit.
In 2014 here is Exception, In all above data after Election Result &
formation of New Government rally took place but-
In 2014 Prior to Election Market witness rally
precisely -- later part of 2013. This bull rally is started. This bull rally has
been divided into three parts. ANTICIPATION, LIKELY & ACTUAL.
ANTICIPATION :- Latter part of 2013 Three States B.J.P got Majority
indicating
Mr.Narendra
Mody lead B.J.P./ N.D.A.Wave in Election.
LIKELY :- Pre
Election Survey and Exit Polls Indicating Majority to N.D.A.
ACTUAL :- On its own B.J.P. got Majority.
In this seven Months Market
rallied almost 7,000 Points On B.S.E. & 2,100 Points on N.S.E. On EXPECTATION But where is Growth?
1) Recently everybody is
expecting that Industrial Growth will rise and Inflation will fall.
Exactly it happened - but in
opposite direction Industrial growth fall to 3.5% and Inflation rise to 8%.
2) Still all over India basis we
are running Rainfall deficit./floods.( Unevenly distribution of rains) affecting food productions tends to rise
inflations. Unless and until inflation is not coming under control ( R.B.I.
projection 6% by middle of 2015.) there is no room for interest rate cut. Industry loans are
available at higher cost.
3) First quarter of 2014 Company
results are average or even below expectations compared to its market rates/valuations
rather two or three Sectors are managing the show (Sensex Management) namely I.T.,
F.M.C.G, PHARMA, H.D.F.C. & TATA MOTORS etc. What’s new? Again, Old wine content in New Bottle. (Here you don’t expect too much from P.M. Mr.
Narendra Mody and its team. Here we have to give at least 12-18 Months to revive
the Economy)
4) International Tensions like Iraq and Gaza
belt.
On above facts we assume that in short term Valuations are
gone ahead of its Fundamentals on Domestic front but on International front
things were further more gloomy. Well known Economist & R.B.I. Governor
Mr.Raghuram Rajan in his Interview to Times of India exactly forces me to recollect
the old bitter memories of 2008 World Economic Crisis.
As per Mr.Raghuramrajan -- U.S.Federal Reserve and other
Central Bank Policy to keep long term
low interest rate and Super easy Money i.e.Q E. leads to—Assets of all sorts
have become Inflated ( Bubble) laying groundwork for more Financial Market turmoil.
(Recently Italy is facing Economic recession)
On Indian soil also we are witnessing “Super Easy money
flow” indicating in days to come, formation of New Historic High is on card
around 8,050 to 8,200 on Nifty.
In this process of “HAPPY DAYS ARE HERE AGAIN” we should not
forget past History.
All Financial Markets
perform Exactly Opposite of Rational Human being thinking.
Market men often say “On
Euphoria Markets form Top and in Panic Markets form Bottom” And “On Rumors you
have to buy and on News you have to Sell”.
At present classic example of this statement is
U.S.Economy.Their G.D.P. grew from 2% to 4% exact double. On this Good news,
Euphoria Dow topped out on 17th July 2014 around 17,151 and fall started.
Now take Our Examples:- After hitting Historic Top In
subsequent days market becomes half.
In1992 Harshad Mehta rally Markets made Historic Top of
4,546 and subsequently B.S.E. Sensex become half i.e. 2,000.
In 2000 DotCom Boom Markets made Historic Top of 6,150 and
subsequently become half i.e. 3,000.
In 2008 Markets made Historic Top of 21,300 and in Panic fall
with in 10 months market fell to 7,700 (all B.S.E. quotes)
As per “ DOW THEORY” ( Technical Analysis Study ) :- With
in one year market may form Top or Bottom. It’s a turning point for on going
Bull/ Bear Rally.( Here you have to refer
bull rally.)
Friends, if you
remember exactly on 28th August, 2013 Markets formed bottom around
5,118 on Nifty and on BSE Sensex 17,450 in coming days we are completing 1 year
so now we are nearby area to form top ( On Nifty 7,800 to 8,100) and then
afterwards Panic fall. Nifty may fall between 6,800 -- 7,200. SO BE ALERT ON
HIGHER SIDE.
NEED
OF HOUR.
Take the assessment
of your Portfolio e.g. If you Invested Rs.5 Lacs in last 2yrs. Take a present
valuation of your portfolio. Start booking profit in shares in which you are in
profit. In every rally sell 25% so your average is near to High. Believe it on
me nobody in the market is able to catch Top or Bottom. All are near by. Stop
buying for long term rather don’t buy.( But STILL “ DIL HAI KE MANATA NAHI”)
Then buy for very short term basis.
Keeping in mind 5% to 10% return with Strict stop Loss. When there is
Euphoria start selling shares which are slow moving because we have given
maximum time to perform. Ask this question to your mind.-- In this super
fantastic rally if this slow moving /loss making share are not rising/ moving then when will it
move? In bear market ? no
question. So realize the fact and be on cash “CASH IS KING”
Conclude this write up by
Investment Guru Sir Peter Lynch’s historic quote “Bull markets born on Pessimisms, grow on Skepticism, mature on
Optimisms and die on Euphoria. So, best time to sell is on Euphoria. Exactly
that’s what we are experiencing right now.
Ashish Thakur.
(Columinist, H.N.I.
Consultant & Faculty (M.B.A.FINANCE)
(Imp.Note.:-
This write up is for information purpose
for M.B.A, FINANCE students. On this write up if any STOCK MARKET / Financial
position is taken neither Ashish Thakur nor his write up is held responsible
for any financial loss please note. Please consult your financial advisor
before taking any position.)
