The Crash( 17.5.2006) and FII activities since then

[pkjha30]

Thats probably because shorts who were neck deep in water (trouble) must have covered progressively last few days, while prospective Longs (wanting to buy) who are waist deep in water in Mumbai may have found their mobiles drenched and no way to call their brokers.

But seriously... during rallies in 'bearish' times, volumes tend to dry up. So maybe its not the right time to go long

AGILENT

Hi Agilent

About shorts and longs you were probably on the mark.

As for the volume I tried to correlate it with nifty volumes with indices value.

Coudn't come to a conclusion. In fact it doesn't seem to generalise in that way. May be theories say that. But then that proves to be waterloo of an analyst. I thought I would collect all data and post it with nifty values. But paucity of time. If you couls help me. I saw volumes on an average oscillating betwee 6000( in troughs) to 9000(On peak).But not a serious decline was noticed.

Waiting for confirmation.
Pankaj

 

[mahmeds2000]

Hi all,
I wanted to share the following report.

Source: BWI

Most people believe that the stockmarket crashed in May 2006 because the FIIs sold. But thats part of the picture. Local punters played the highly leveraged stock futures market of early May. They had bid up the futures prices till they quoted at a hefty premium to spot prices.

During this period, the FIIs sold futures and bought in the cash market because of the arbitrage opportunity. They tried to gain by selling higher in the futures segment and buying lower in the cash segment. When the fall started on 12 May and futures became available at a discount, FIIs reversed their strategy.

Between 1 May and 12 May, FIIs sold a net notional amount of Rs 3,644.96 crore in the futures market while buying a net Rs 2,525.8 crore in the cash market. Between 15 May and 31 May, the position was reversed with the FIIs buying a notional amount of Rs 7,046.59 crore in the stock futures market while selling a net Rs 10,772 crore worth of stocks in the spot market. Netting out the cash and stock futures markets, FIIs were sellers, not only after 12 May when the market fell, but also before it.

Since 2 June, however, FIIs have been net buyers both in the cash market and in stock futures. Till 19 June, they bought a net Rs 3,515 crore of futures and Rs 2,422 crore in the cash market. Thats almost as much as they bought into the cash market in early May. So why hasnt the index gone up? Because mutual funds have become net sellers. In the month to 18 June, they sold a net Rs 2,304 crore, while they had bought a net Rs 2,075 crore between 1 May and 12 May. The FIIs may have started the slide, but the local sellers are continuing it.

thanks
Ahmed

 

[Agilent]

Hi Agilent

About shorts and longs you were probably on the mark.

As for the volume I tried to correlate it with nifty volumes with indices value.

Coudn't come to a conclusion. In fact it doesn't seem to generalise in that way. May be theories say that. But then that proves to be waterloo of an analyst. I thought I would collect all data and post it with nifty values. But paucity of time. If you couls help me. I saw volumes on an average oscillating betwee 6000( in troughs) to 9000(On peak).But not a serious decline was noticed.

Waiting for confirmation.
Pankaj

Sure, will help.

Which is the best site for tracking Nifty/Sensex charts weekly (with volumes) ?
AGILENT

 

[pkjha30]

hai all, reproduced below is an extract from Incademy.com about bear market

How to spot the appearance of a bear market
No bell rings to announce the start of a bear market and bull markets often begin in similar muted fashion.

But the final phase of a bull market, which precedes the start of a bear market, is usually accompanied by a number of signals:


An indiscriminate and exponential rise in prices

The widespread belief that 'it's different this time'

Widespread fear of 'missing out' on the next hot stock

The abandonment of traditional methods of valuing shares

High levels of trading volume and increased involvement of private investors

Relatively high or increasing interest rates

Major phases of a bear market

Historically, major bear markets have also followed distinct patterns.

First phase
There is a sharp initial fall that removes much of the 'froth' from the market.

Middle phase
There is a strong rally in prices for several months, which may lull some investors into thinking that the bear market is over. The rallies can be dramatic, but have lower trading volume than the initial sell-offs. And the advances tend to be concentrated on a few selected stocks, not the whole market.
Third phase
There is a long slow downward grind in prices, accompanied by low volume and periodic false dawns until the bear phase ends quietly as share valuations reach rock bottom. At this point, few investors from the earlier buoyant phase in the market are interested in anything other than the most conservative investments.
Once started, bear markets rarely finish without at least a 40% decline in prices from the previous bull market peak. Often it is substantially more than this, sometimes as much as 80% or 90%. The bottom of the early 1970's bear was 50% below the peak. The 1929-33 bear market saw the Dow Jones index fall to around an eighth of its 1929 peak.

The average length of bear markets is frequently said to be around 16 months, but this average includes short 'corrections' such as the 1987 'crash'. Major bear markets typically occur after a decade of rising share prices, and last for about four years.

Hi Ravi

Its a nice exposition on psychological states during various market trens especially during a bear phase in an intermediate downtrend within an intermediate uptrend within a secondary bull market of a primary bear market in a secular bull market.........well where was I?

As an ordinary investor I am lost.

In all this zid zag patterns carved out by sensex I have seen only one thing. Bull market or a bear market , it has to reflect the country's condition, economic growth and what not.If we reach the pinnacle of modern achievement we have perhaps no other way but to become a stagnant pool or go down slowly or rapidly.

We do see evidence of uneven progress.We do see dependence on FDI and FII and globalisation and integration with the world economy with its pitfalls and encouragements.

What I am not able to see is that country is not progressing.
Yes. It is growing.The day we see it not growing we will know that it is a bear market.Till such time to concentrate on these ups and downs without regards to fundamental strengths of a company is to close our eyes from reality and to behave like an ostrich.

Well you could at least tell us if this is a major bear market after a decade of bull market( may be starting from 1996???) so lasting for next four years or a smaller bear market lasting for 16 months( of which two months are gone) after a bull market of what period?? ,three years, perhaps starting from 2003. Also tell me from which level we will do 80% correction. There is a chart in Saint's Fishing harbour. Have a look. Which peak You would be talking about.??

If a disaster is waiting to happen then it has already happened.We might be approaching Pillar Number 14 of jdm's highway to sanity in the same fishing Harbour

Are you dead sure?

Who could tell?

regards
Pankaj

 

[pkjha30]

Sure, will help.

Which is the best site for tracking Nifty/Sensex charts weekly (with volumes) ?
AGILENT

Well ,I thought I would rely on nse

Pankaj

 

[pkjha30]

Hi all,
I wanted to share the following report.

Source: BWI

Most people believe that the stockmarket crashed in May 2006 because the FIIs sold. But that’s part of the picture. Local punters played the highly leveraged stock futures market of early May. They had bid up the futures prices till they quoted at a hefty premium to spot prices.

During this period, the FIIs sold futures and bought in the cash market because of the arbitrage opportunity. They tried to gain by selling higher in the futures segment and buying lower in the cash segment. When the fall started on 12 May and futures became available at a discount, FIIs reversed their strategy.

Between 1 May and 12 May, FIIs sold a net notional amount of Rs 3,644.96 crore in the futures market while buying a net Rs 2,525.8 crore in the cash market. Between 15 May and 31 May, the position was reversed with the FIIs buying a notional amount of Rs 7,046.59 crore in the stock futures market while selling a net Rs 10,772 crore worth of stocks in the spot market. Netting out the cash and stock futures markets, FIIs were sellers, not only after 12 May when the market fell, but also before it.

Since 2 June, however, FIIs have been net buyers both in the cash market and in stock futures. Till 19 June, they bought a net Rs 3,515 crore of futures and Rs 2,422 crore in the cash market. That’s almost as much as they bought into the cash market in early May. So why hasn’t the index gone up? Because mutual funds have become net sellers. In the month to 18 June, they sold a net Rs 2,304 crore, while they had bought a net Rs 2,075 crore between 1 May and 12 May. The FIIs may have started the slide, but the local sellers are continuing it.

thanks
Ahmed

Hi Ahmed

This surely explains FII strategy to earn money by all available means and hedging at the same time to protect them from unforseen losses. A normal approach to the problem solving but on a scale that certainly affects market equilibrium and shakes up the confidence in the randomness of the market.

Pankaj

 

[mahmeds2000]

Hi dada,
I wanted to ask one quetion. I am watching the market from 8800 level and today it reached 10900 level means 2100 point big up rally within very short time sorter then the bull run from 10000 to 12000. Still why people r saying that this is start of bear market or this this is bear market. I don't know much abt. the market, is in the bear market 2100 up rally is there? which is i think nearly 25%. also most of the small cap stocks gain 50% from very short time is this possible in bear market.nearly most of the stock gain 20% and above. why people r saying this is bear market? many of friend retailer haveing cash and didn't buy at 8800. they still feel market will go below 8000 and they didn't bought yet because of all this news(that this is bear market) and fear. i hear that stocks are decline in bear market in sixteen month 28 to 30%,but this time almost all stocks already have decline more then 30% within 2 month.

wrgrds
Ahmed

 

[rheinu]

Hi dada,
I wanted to ask one quetion. I am watching the market from 8800 level and today it reached 10900 level means 2100 point big up rally within very short time sorter then the bull run from 10000 to 12000. Still why people r saying that this is start of bear market or this this is bear market. I don't know much abt. the market, is in the bear market 2100 up rally is there? which is i think nearly 25%. also most of the small cap stocks gain 50% from very short time is this possible in bear market.nearly most of the stock gain 20% and above. why people r saying this is bear market? many of friend retailer haveing cash and didn't buy at 8800. they still feel market will go below 8000 and they didn't bought yet because of all this news(that this is bear market) and fear. i hear that stocks are decline in bear market in sixteen month 28 to 30%,but this time almost all stocks already have decline more then 30% within 2 month.

wrgrds
Ahmed

CAT FELL IN HOTWATER FEAR TO TOUCH EVEN COLD WATER

 

[pkjha30]

Hi dada,
I wanted to ask one quetion. I am watching the market from 8800 level and today it reached 10900 level means 2100 point big up rally within very short time sorter then the bull run from 10000 to 12000. Still why people r saying that this is start of bear market or this this is bear market. I don't know much abt. the market, is in the bear market 2100 up rally is there? which is i think nearly 25%. also most of the small cap stocks gain 50% from very short time is this possible in bear market.nearly most of the stock gain 20% and above. why people r saying this is bear market? many of friend retailer haveing cash and didn't buy at 8800. they still feel market will go below 8000 and they didn't bought yet because of all this news(that this is bear market) and fear. i hear that stocks are decline in bear market in sixteen month 28 to 30%,but this time almost all stocks already have decline more then 30% within 2 month.

wrgrds
Ahmed

Hi Ahmed

As per consensus, start of the present bull run is counted from May 2003 when nifty was at 924 or so and at the so called peak of bull run it was at 3700 or so representing about 400% rise from the hase of bull market. If a retracement has to take place , not as a correction but as a bear market then I feel it should retrace 33%-66%-133% respectively. 33% represents about 916 point correction of the rise. i.e.2700. 66% correction represents about 1832 . That means after 66% retracement Nifty should be at 1900 in a confirmed bear market. At 133% correction it should be well forget it . their theory will break down by that time and they will all be in Agra while admiring Tajmahal.

It had about 33% correction(actually little more than that). But then it has rallied from the low. Even in bear market such shortterm rallies lasting few days to one or two months is not uncommon. So the jump could be a false trend unless confirmed by breaking the peak of the bull market.Remember Higher pivot lows . It will be making that only and all will rush to sell. It it crosses that peak then it is a fresh uptrend in bull market as it would form Higher pivot high.

The Bull trend will not be negated unless it takes out something 2632 conclusively on increasing volume.Below that we will be in doghouse.

Well that is what I understood from all the discussion. May be my understanding is wobbly or downright wrong.

My belief is that we have seen the bottom and are not to see it again in near future. The market is entering a volatile period and then a consolidation period with less volatality with lower volume on downside and higher volume on upside before we take the peak. If it is just opposite then you know what Baron would say. Milestone 14 on jdm's chart in the fishes and loaves of Saint.

During Bear period strong hands accumulate the stocks and weak hands exit. This reduces supply while prices go down. At some point frustated market participants are going to say I can not live without you and jump straight away and prices will see a jump. This happens after the bottom forming is complete. The stock is ripe for jump. Thats the start of fresh bull market.

Well we will witness all these things through the able hands in this forum but after another10 years.Meanwhile we shall see cycles of ups and downs.

Pankaj

 

[amitt29]

Hi dada,
I wanted to ask one quetion. I am watching the market from 8800 level and today it reached 10900 level means 2100 point big up rally within very short time sorter then the bull run from 10000 to 12000. Still why people r saying that this is start of bear market or this this is bear market. I don't know much abt. the market, is in the bear market 2100 up rally is there? which is i think nearly 25%. also most of the small cap stocks gain 50% from very short time is this possible in bear market.nearly most of the stock gain 20% and above. why people r saying this is bear market? many of friend retailer haveing cash and didn't buy at 8800. they still feel market will go below 8000 and they didn't bought yet because of all this news(that this is bear market) and fear. i hear that stocks are decline in bear market in sixteen month 28 to 30%,but this time almost all stocks already have decline more then 30% within 2 month.

wrgrds
Ahmed

Mahmeds even though we r having a 2100 point rally after a severe decline,there are some levels to watch out for,surely u r ont going to invest as lots of ppl did on the first decline from 3555 to 3290.Having bought at expensive levels.
I believe three things shud weigh foremost purely for fundamental reasons
1)Are u comfortable with a price of a stock(proven performer like ITC,Infosys,TCS,Maruti,Tata etc).These are questions u shud ask urself.
2)Dont go by sentiments of crowd,see the fundamentals of economy.Sometimes it so happens that after or in an ongoing decline sentiments are hit and everything looks bleak.
3)Are u a trader or investor.Even as investor dont buy ur stocks at one go,accumulate at levels ur comfortable with(Stability being foremost).Even if it holds on to 50 points gain everyday of a week.U dont want 400 points days,50 points on an average for 15 days and 5 days of down,so tht profit can be booked and new ppl can enter.
This current rally has been interrupted with falls,triggered by panicky traders ,investors who got in at high levels and who had tried to catch the falling knife.They will try to exit at single hint of trouble(and they are exiting).Current case being Global cues(DOW etc).You have to take ur call whether u ride this wave or trade against it.
Hope I am correct in my brief assesment.I have learnt all this from Pankaj's posts.So Thanks to him.
Regards