Where will Nifty bottom out?
The last five weeks has been vicious for the market. After clocking a high of 11750 in early September, the low of 10250 was made last week. A fall of 1500 points (-13%) in a matter of five weeks.
The midterm view – Oct to Dec 2018
In the chart given below, I have marked 4 circles in BLUE and 1 in BLACK. Carefully look at the periods like the year 2015 when market corrected after the Modi rally or the Oct – Nov 2016 Demonetization correction, all marked in BLUE.
During both the periods, the intensity of the bad news flow were pretty high and subsequently the markets went on to touch the levels marked by Bollinger Band 2.5 & 3 Std deviations (Marked in Green dotted & Red). And the bottom was made. I think the likelihood of a similar script playing out this time also is HIGH.
Currently the BBs are placed at –
Bollinger Band 2.5 Std deviations = 10064
Bollinger Band 3 Std deviations = 9864
The likely trigger for this kind of a move this time will be –
- BRENT will be upwardly mobile again after some consolidation…
- Resulting in continued pressure on the RUPEE.
- US 10 Year Treasury Yields will keep moving up in view of the continuous rate hikes. EM currencies and stocks will see redemption.
All the same reasons which led to the last five week correction 🙂