Indian Stock Market, a copy of its own History !

This is the special analysis report produce by EquityPandit.com to help our visitors. We get hundreds of emails daily with the questions:

- What would be trend of market in near future?
- Why market is going down?
- When market would stabilize?
- What time market would take to reach again the previous heights?

For last one month, I and my team including Mr. D.J. Shah (Financial Analyst, EquityPandit.com) is working on all these questions. And finally we were able to make all the questions regarding Stock market, transparent. Behind these following lines, there is a lot of analysis, which was done by EquityPandit.com

Let’s move into the History of Indian Stock Market.

The 1992 Cycle

Market Peaked – April 1992
40% correction – July 1992 (3 months)
Market Bottomed – April 1993 @ 60% of peak level - Total correction
Sensex PE at bottom – 10x
Back to previous high – October 1999

6.5 years from bottom to reach April 1992 highs – Recovery

4.25 years from bottom to reach April 1992 highs – Recovery

So now let’s talk about the present crisis:

The 2008 Cycle

Market Peaked – January 2008
40% correction – August 2008 (8 months)
EXPECTED Market Bottom @ 60% of peak level = 8320 level (We guess)
EXPECTED Sensex PE at bottom – 10x

2.75 - 3 years from bottom to reach previous peaks. (We assume)

From this analysis, you will come to know market behaviors that it will never change its mentality. How it follows its history.
We have taken two terrible examples from the history of market & when We compare its price (%) movement with present one, it follows in a same way in a same time frame.
So it shows that why we need a kind of model which can guess the upcoming moves of market under different circumstances, which EquityPandit.com is doing right now.

Conclusion:-

1) Market flow will depend on FII movement only. Movement Chart is directly proportional to FII inflows or their outflow.(Ex: Year 2000 FII investment increase by 52% @ the same time market increase by 60% n when they withdraw their 53% investment in sep 2001 market was downed by 55%)

2) Market reacted five/Six month before some good/Bad happened actually (Ex: Prices of metals have broken by 38% within this three month but market already taken that factor before six month when prices of all metal sector shares started down by 10-20% and that trend continue now also).

3) In Every down cycle the correction gets higher and higher where recovery time becomes shorter and shorter (See case of 1992 vs. 2000) so this market will take recovery time of atleast 2.75years as per our analysis.

4) It created same percentage of volume during a day or two day before great fall n great jump.

The 2000 Cycle

Market Peaked – February 2000
40% correction – October 2000 (8 months)
Market Bottomed – September 01 @ 58% of peak level - Total correction
Sensex PE at bottom – 10x
Back to previous high – January 04

4.25 years from bottom to reach April 1992 highs – Recovery

So now let’s talk about the present crisis:

The 2008 Cycle

Market Peaked – January 2008
40% correction – August 2008 (8 months)
EXPECTED Market Bottom @ 60% of peak level = 8320 level (We guess)
EXPECTED Sensex PE at bottom – 10x

2.75 - 3 years from bottom to reach previous peaks. (We assume)

From this analysis, you will come to know market behaviors that it will never change its mentality. How it follows its history.
We have taken two terrible examples from the history of market & when We compare its price (%) movement with present one, it follows in a same way in a same time frame.
So it shows that why we need a kind of model which can guess the upcoming moves of market under different circumstances, which EquityPandit.com is doing right now.

Conclusion:-

1) Market flow will depend on FII movement only. Movement Chart is directly proportional to FII inflows or their outflow.(Ex: Year 2000 FII investment increase by 52% @ the same time market increase by 60% n when they withdraw their 53% investment in sep 2001 market was downed by 55%)

2) Market reacted five/Six month before some good/Bad happened actually (Ex: Prices of metals have broken by 38% within this three month but market already taken that factor before six month when prices of all metal sector shares started down by 10-20% and that trend continue now also).

3) In Every down cycle the correction gets higher and higher where recovery time becomes shorter and shorter (See case of 1992 vs. 2000) so this market will take recovery time of atleast 2.75years as per our analysis.

4) It created same percentage of volume during a day or two day before great fall n great jump.