It's a two part Series article. This is Part I
Nifty made a classic Text Book bottom on August 31, 2013, and now 4 years later - Nifty is trading near 10000 and the entire rally till date has been Classic Text book and it has done exactly what it was supposed to do. Here's how it all started:
Before Birth of this Bull Market: Let's talk about how Last Bull market ended and what happened after that. Lets go back to 2008
Nifty made a high of 6300-6400 in Jan 2008 and then thanks to Global chaos of 2008 - Nifty crashed from 6400 all the way down to 2500-2700. It was a Global crisis and one of the darkest period of Global financial market. Ben Bernanke US Fed Chief took the leadership role during crisis and started stimulating Global economy. He made that famous GREEN SHOOT comment in March 2009 and that's when Global markets made bottom. Nifty too did the same.
Since, markets were so depressed that marginal buying and short covering resulted in massive spike in equities and the rally was so sharp that in just 1.5 years - Nifty was back at 2008 highs. India once again started Shining. Obama visited India during Diwali time, everything looked great and Nifty made another peak. But was the real picture that great - I remember tweeting back in those days this
Our country has never looked in so mess as it has been this month: Scams, Nira Radia tapes, messy Parliament and now tanking equity market
— Deepak Singh (@smarket) November 28, 2010
Nov 2010-May 2013: India beneath the Shining layer was a Sinking Ship with No leadership, massive Corruption and Hyperinflation.
Manmohan Singh was a bad leader and India paid a heavy price of economic mismanagement. Even though Nifty did not tank, thanks to massive consumption boom on back of corrupt parallel economy, stress was everywhere and for everyone to see. Public anger got channeled in various agitations
Where is our country going? It looks like our Economy has been put on Auto pilot mode and Pilots have gone to sleep.
— Deepak Singh (@smarket) November 28, 2010
May 2013-August 2013: Indian Market got hit by Murphy Law: When things go wrong, they go wrong at the worst possible time. Welcome Taper Tantrum
Indian Economy was in a Fragile 5 category and US Fed started talking about Tapering in May 2013 which meant pulling back on Quantitative easing back then. It was enough to create panic in Emerging markets. Indian currency INR tanked from 54 to 69 within few weeks.
The best thing that can happen in next few months is a complete meltdown of Indian economy. That will scare people, lead to decisive mandate
— Deepak Singh (@smarket) August 16, 2013
It was so depressing that even creative artists were tweeting like this
My investment banker lectured me for 2 hours on Indian economy. Completely depressed me. Need some good music to lift my spirits.
— ashabhosle (@ashabhosle) August 20, 2013
August 2013: It's always darkest before Dawn
Despite complete pessimism - Nifty did something very interesting - it sold off big time for two consecutive weeks but both the time, it rallied and closed above 200 week ma. This was the first sign: Market trying to price in extreme pessimism. In Price Action terms - it means the Market running out of sellers.
This is how Nifty made bottom on August 31 2013 and the new Bull market started
That's why we can celebrate Sep 01 as Birthday
Two things happened in September 2013:
1. Raghuram Rajan becomes RBI Gov
2. Narendra Modi becomes BJP's PM candidate
Start of HOPE PHASE and Modi Bull Market:
Aaj Ka Haal "@bibekdebroy India has always been strong economy with great future & great past. It is the present that has often been bleak."
— Deepak Singh (@smarket) September 4, 2013
Udayan: What would happen to market if current Govt gets reelected?
Rakesh Jhunjhunwala: I don't contemplate things that won't happen
— Deepak Singh (@smarket) September 10, 2013
But Nifty stalled once again at 6400 because of disappointing election result in Delhi. Then things started improving in March when opinion polls started indicating clean win for Modi. Nifty broke out to New high above 6400 and new phase of Bull market started
I even made this presentatin when Nifty broke out in March 2014 to new High titled Don't Dismss it.
I will cover how Nifty has rallied between March 2014 and August 2017 in second part series next week. It has been amazing text book move. I love to watch the real world through Price Action and Charts. I am Deepak Singh and I educate people on these concepts.
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