Q&A_ Is Nifty heading for a bear market?
Namaste!
I have been tracking DJI (Dow Jones Industrial Average) for quite a while. The bear market is defined as 20% correction in benchmark indices from the all time highs.
SPX (S&P 500) has fell into bear market twice (2nd after retracement), it closed below 20% line on daily as well as weekly candles. But it did recovered from those levels until recently, it closed again, it is in a bear market now.
However, Dow Jones hasn't closed below 20% levels at the above mentioned period. This time, it has closed below 20% level on daily candle.
I will be 100% sure of a bear market if DJI closes below on Weekly candles.
If DJI fall into a bear market, there is a very highest probability our Nifty 50 will to. It can take Nifty to 14600 levels.
How to plan this bear market?
1. For people already invested:
Don't sell your current holdings to buy at cheap. It will be a add more opportunity. You can consider either investing 50% of remaining investing amount now, 50% at Nifty 15100 or 14600 levels or whole remaining capital at 15100 levels.
2. For people waiting for investment:
I would advice to invest 30% of the capital now and remaining 70% at Nifty 15100 or 14600 levels. These levels are drawn assuming Nifty will create the last swing low at 15100 level, and 14600 level is a psychological and a 20% level.
Will all the stocks in Nifty 50 fall at the same speed?
A: Nope. Overvalued blue-chip / large-cap stocks will fall more than those of (undervalued) fundamentally strong.
Mid cap and small cap will fall at greater speed after taking above points into consideration. So if you hold small and mid-cap, get ready to stomach more downside. BUT DO NOT SELL.. Warren Buffett doesn't sell and other notable investors I know advice the same.
Disclaimer: The analysis I have shared is based on my understanding and experience in the markets. This article must be assumed as a opinion only not a trading/investing call. Please do your analysis and/or consult your financial advisor before investing.
I have been tracking DJI (Dow Jones Industrial Average) for quite a while. The bear market is defined as 20% correction in benchmark indices from the all time highs.
SPX (S&P 500) has fell into bear market twice (2nd after retracement), it closed below 20% line on daily as well as weekly candles. But it did recovered from those levels until recently, it closed again, it is in a bear market now.
However, Dow Jones hasn't closed below 20% levels at the above mentioned period. This time, it has closed below 20% level on daily candle.
I will be 100% sure of a bear market if DJI closes below on Weekly candles.
If DJI fall into a bear market, there is a very highest probability our Nifty 50 will to. It can take Nifty to 14600 levels.
How to plan this bear market?
1. For people already invested:
Don't sell your current holdings to buy at cheap. It will be a add more opportunity. You can consider either investing 50% of remaining investing amount now, 50% at Nifty 15100 or 14600 levels or whole remaining capital at 15100 levels.
2. For people waiting for investment:
I would advice to invest 30% of the capital now and remaining 70% at Nifty 15100 or 14600 levels. These levels are drawn assuming Nifty will create the last swing low at 15100 level, and 14600 level is a psychological and a 20% level.
Will all the stocks in Nifty 50 fall at the same speed?
A: Nope. Overvalued blue-chip / large-cap stocks will fall more than those of (undervalued) fundamentally strong.
Mid cap and small cap will fall at greater speed after taking above points into consideration. So if you hold small and mid-cap, get ready to stomach more downside. BUT DO NOT SELL.. Warren Buffett doesn't sell and other notable investors I know advice the same.
Disclaimer: The analysis I have shared is based on my understanding and experience in the markets. This article must be assumed as a opinion only not a trading/investing call. Please do your analysis and/or consult your financial advisor before investing.
Comment:
This 2.6% rally looks like a retracement only.
Comment:
Disclosure: I am short on Nifty50 via options for the next year.
Comment:
I expect anyone who is reading my writings to know that there is nothing "certain" in the markets. Neither the %gain on stock nor "out-performance" or "under-performance". There is a risk and opportunity cost involved in both, buying and selling. Selling at any price can often result in "opportunity loss" when the stock moves higher and higher. Human psychology is a culprit here. For e.g. I post any stock which seems undervalued or overvalued to me on tradingview. When anyone makes money on that, they wont appreciate me "a single word". But when they lose or it results in opportunity loss, they are bound to blame me. I don't criticize any person, because I know their psychology has defeated them. At last, there is nothing like "easy money" in the markets. The survival of the fittest holds absolutely true here.
Comment:
One other example of a culprit human psychology. I am short on Nifty50, so I started looking for reasons of market falling. I found that there is a pneumonia outbreak in China recently. It felt me happy because I was short on Nifty50 and it may result in falling market (correction). But, is it humane? Praying to god to make people die, just to make some money in the short position? It felt really bad after realizing this. May be that's why the god made bull markets more often and more lasting (time) than bear markets. Pessimism is short-lived whereas optimism lives longer. Optimism always wins in the long term. Take for instance a glass half-filled with water. You can't get or achieve anything seeing it half-empty. But, you surely achieve something seeing it "half-full".
Comment:
I am not a financial expert and everything I am saying is based on my understanding and opinion. Take everything I am writing as a grain of salt. You must consider your financial advisor before taking any actions. DJI and Nifty50 have hit all time high, whereas S&P 500 did not yet. I did not make anything substantial in the year 2020 by buying at a discount. And I think many of the investors couldn't have as well. Anyways, lets calculate the returns of DJI, SPX & Nifty50 since Dec 2020 till Dec 2023. DJI +23.14%, SPX 26.98% & Nifty 50 +55.42%. Now subtract them with FD rates (India has 7% and I don't know about USA, lets take 3%). So, after deducting FD returns for 3 years, DJI +14.14%, SPX +17.98% & Nifty50 +34.42%. -10% correction is more often than -20% corrections. So, let's take -10% correction every 1-2 years and -20% correction every 2-4 years. My point here is, markets hitting all time high, it's very good, but you can not rule out corrections. If, by any chance we could buy at correction (say 19-30%), we would be standing at the same level as the guy who bought on 31 Dec 2020. But, it's a tough nut to crack for most people. Do you think money makes money in the market? Then, you're wrong. Patience makes money in the market. It's not a sell advice either. The point I want to make is, when we're patient enough, the market have a very big heart and it might give us another chance to buy. But, it demands one thing for sure, "patience".