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Last Updated : Mar 27, 2020 04:02 PM IST | Source: Moneycontrol.com

The untold story! 2020's Nifty crash comparable to 1987 not 2008

India is supposed to have entered the most delicate phase with respect to Corona Virus and Nifty has already rallied by 1100 points from the lows! Astonished Yet!


Ashish Kyal, CMT

We have been bold and strong over many weeks that major top is formed in Indian indices and it is comparable to the 2008 collapse. But, it seems we were conservative and the fall is actually comparable to 1987.

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When we pointed out - get ready for 2008 crash not many paid heed and now it looks to be bigger than that and actually comparable to 1987!

Only a few who acted on the advice have been cashing the crash and the rest are occupied identifying the news or events resulting in the drastic downfall.

We are facing unprecedented challenges to humanity and existence the way we know it. Given the current pandemic of coronavirus, human survival instincts are challenged.

We have been able to flourish on this planet only because of the strong zeal to grow amidst the situations. Case in point is we do acknowledge the gravity of the situation but these are not the times to blame nature or anything else for the financial meltdown but to see what best can be made out of it.

We have a history that shows that the best of the ideas and financial institutions came up during the Great depression of 1929!

So, during these periods we need to take charge of our trading or investment decisions and see what is working in the current bear market.

Now look at the below charts, Do you see any similarity in the fall?

Weekly chart:

Waves 27 March


Let me reveal the secret! The first chart is of Dow Jones Industrial Average (DJIA) from the year 1987 crash and the second chart is of Nifty Index year 2020 so far, Astonished Yet!


This is the power of looking at patterns across the market and time frames. This clearly shows that the pattern and the intensity of fall seen on Nifty is nothing but a repetition of 1987.


Also, it shows that it is Greed, Fear and Hope that results in movement of the stock market and the events only result in short-term volatility or acts as a trigger.


Coronavirus is widely referred to as the only reason for the financial and economic collapse. But, the markets were already exhibiting series of negative divergences and loss of momentum.


The major global epidemic outbreak has been during the extended period of a bear market as pointed out by Robert Prechter, Executive Director, Socionomic Institute.


The stock market acts as a barometer of social mood and the depressed stock market represents a negative social mood. It is during this period that the society is more susceptible to the epidemic outbreaks.


India has just started to catch the Corona fever and the markets have topped out much earlier in January 2020. In fact, the day honorable Prime Minister – Modi announced the 21-day lockdown on 24th March evening, the very next day on 25th March Nifty closed up 497 points – 6.37 percent higher locked biggest gain in 11 years!


Followed by another 4.10 percent gain on 26th March 2020. This has resulted in an up move of more than 1100 points on the index from the lows of 7511 made on 24 March 2020 starting the day complete India lockdown was announced.


The above indicates that freely traded markets move ahead of events or news and any trading decision based on news outflow is like driving a car looking at the rearview mirror.


Events can result in a short-term random movement which can last for a few minutes or hours or days but the original trend eventually resumes!

Your entire perception towards the cause and effect will change if only you stay focused on the facts and the patterned behaviour of the market which is very well defined as per Elliott wave analysis that carries the forecasting ability and the news will eventually follow.

India is supposed to have entered the most delicate phase with respect to coronavirus and Nifty has already rallied by 1100 points from the lows! Astonished Yet!

(The author is CEO Waves Strategy Advisors. He could be reached on Twitter at @kyalashish)

Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



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First Published on Mar 27, 2020 11:07 am
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