indiamarketoutlook

Nifty: Is it really Corona effect or is Corona just an excuse???

NSE:NIFTY   Nifty 50 Index
Nifty
CMP 9955

Couldn't think of any better song to describe how the media is portraying the current Market carnage

"You you're my mask
You're my cover, my shelter
You you're my mask
You're the one who's blamed...
...Sad but true"

I strongly feel Corona is just an excuse... the real reason is something else...

Don't believe me...

Well, we all agree the world markets have been falling like any thing in the last couple of weeks. And for any fall around the world, the media has highlighted that it is because of Corona virus detected in India, in US, in Italy and where not. But think about it.... It originated from China and interestingly all this while Shanghai Composite index has stood it's ground while it was carnage all around the world (fall of anywhere between 17-30% in a matter of days for other indices and negative 1% for Shanghai).... What an irony, isn't it?

But I'm sure, you can find the answers if you just look at the charts on a slightly longer duration

This is Shanghai Composite chart


- On a 5 year horizon we observe that Shanghai is already down more than 40% from its 2015 peak

- multiple support lines emerging around current levels

- currently holding on to 2016 support zone

- waiting for trade direction confirmation

- momentum might be seen either above 3066 for target of 3600 odd levels

- or below 2806 for target of 2635 / 2400 odd levels

This chart explains why China has not reacted that much

And if we look at Nifty chart for that matter



Also Look at the too expensive Nifty Price to Earning Valuations (PE around 29 ) when Nifty was at 12400 odd levels.

Well, well well the picture gets clearer... the fall was bound to happen...


What next... We might not be out of the woods yet ( Nifty PE is currently at 22.66)


but till the time Nifty is above 9400 there is strong probability of testing 10350-10450 odd levels. And Above that it can attempt for 10740-10820 levels.

Below 9300 we might retest 8500 levels again

Take care & safe trading...!!!
Trade closed manually: As suggested below 9300 Nifty will try to retest 8500 levels. Nifty is already down 500 points. Those who initiated short positions below 9300 may consider booking profits...
Trade closed: target reached: As suggested below 9300 Nifty will be testing 8500 odd levels. Well Nifty made a low of 8545 today. Target achieved.

Comments

the real reason is asset bubble. it needed a small pin to prick it.. came the corona excuse
+1 Reply
@Parasuram, yes sir, u have rightly analysed the cause... Asset bubble.. Nifty Price to Earning ratio was above 28 in Jan 2020 higher than 2008 asset bubble Valuations....
It was just waiting for something to burst...
Reply
Your comments may come true I also believe ... just wait till Friday closing
+1 Reply
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