Target Sensex

In my September 13 2011 blog, Sensex  bottom target : The UPA gap I had written that the Sensex will bottom between 12000 to 13000.
I had also draw parallels between the Great Depression of the 40"s  and the present recession.


But instead from a low of 15175 on 20th December the Sensex went to 18428 ( Feb 21) in a span of 2 months ( Jan and Feb.) A return of 20/50% in most A group stocks.

What Happened?

A. Post Lehman collapse in 2008 ( corresponding to 1938) the Liquidity gush provided by QE1 and QE2 sparked the Equity + Commodity + Bullion rally. ( Dollar carry trade)
Waning of the effects of QE lead to the declines in 2011 ( corresponding to 1940)


B. LTRO ( Long term refinancing operations of the ECB):
First round of 500 Billion Euros in Dec /Jan
and Second round due on Feb 29 expected to be again of 500 Billion Euros.
The Euro carry trade now, leads to Global equity + Crude  rally. This will lead to a peak  ( corresponding to the peak between 1940 /41.)

From now the rally in the Indian markets will not be that rapid because of continued supply of Paper from:
1. Govt: PSU divestment (ONGC, BHEL, etc.)
2. Banks / Long only FIIS/ Pension funds: Citi-- HDFC   


When will the rally end:
1. When the effects of LTRO weans / No new LTRO
2. Another global crisis ( Iran / Euro zone/Default of CDS (credit default swap) / ?/?)
3. Face book IPO ( Global, Reliance Power IPO)
4. Post US presidential elections ( 44 countries globally have Elections this year including US, France, China, South
Africa)

 The present rally is a  Bull trap.  No new sectors will participate only old  fancied Infra / cap Goods / will run. 

Bottom of the current rally  should come any time between August to November 2012.

The rally will not / may just ( Double top) surpass the prior Sensex top of 21000

the bottom will be the old target between 12000 to 13000

Comments

Post a Comment

Popular posts from this blog

Technology: Mother of Geopolitics and History

Technology Creates History and Geopolitics What came first Chicken or Egg…. A difficult question to answer, what is easy to answer according to me, It is Technology which came first and then Technology dictated the course of Geopolitics and History. Let me explain with examples from Modern History. Industrial age: Industrial age arrived in early nineteenth century. Use of Coal and subsequently Crude Oil lead us to an era of Industrialization especially in Europe. To have control over the raw material used by the industry and also control the markets where the finished goods of the industries were sold, the Industrial countries of Europe Colonized the world. The Geopolitics of Colonization and the subsequent History was the creation of Industrialization. Jet age : With the rise of the Berlin wall in 1944, the world was divided into two. The bipolar world was dominated by the Capitalist and the communist, by NATO and WARSAW, by USA and USSR. This dominance was ...
Read more

The Importance of Doing Nothing

Image
The Importance of Doing Nothing by   Manfred Kets De Vries By giving the brain 'downtime' we can improve mental health and allow ideas to incubate. “Learning without reflection is a waste, reflection without learning is dangerous” - Confucius In today’s networked society we are at risk of becoming victims of information overload. Introspection and reflection have become lost arts as the temptation to ‘just finish this’ or ‘find out that’ is often too great to resist . But working harder is not necessarily working smarter . In fact slacking off and setting aside regular periods of ‘doing nothing’ may be the best thing we can do to induce states of mind that nurture our imagination and improve our mental health. Busyness vs productive occupation Our lives have become defined by busyness. Look around you at the train station, in cafes, out on the street, people are glued to their mobile handset or tablet. But doing nothing has never really been accept...
Read more

Aab Tak Chhapan, Aab Nahi to Kab?

Image
I am 56, if not now then when? "If I can, anybody can". India has become the capital of Obesity, Diabetes and Osteoporosis  due to lack of motivation for Outdoor activity. "If you Desire change, change yourself first". I used to advise patients to opt for a active outdoor life. But nobody listened. As a Surgeon at 56, aspiring to be a role model for wellness and fitness I participated in the Polar Fjallraven 2018 contest. Few years back on reaching 50s, I had lot of problems. Syndrome X, Midlife crisis, Mid WAIST crisis, Mid leg crisis and what not. I had the option of taking the Stick – wooden, aluminium, medicine !! I opted for two sticks instead of one. The stick of Running and Hiking. Over the past five years I have played Squash, Lifted weights done a few Half Marathons,Skied and Trekked. Local treks ( Ghatkopar Tekddi, Mulund Tekddi, Sahayadri Ghats and Forts and then high altitude mountain treks in India and Nepa...
Read more