Rajveer Rawlin received his MBA in finance from the Cardiff Metropolitan University, Wales, UK. He is an avid market watcher having followed capital markets in the US and India since 1993. His research interests includes areas of Capital Markets, Banking, Investment Analysis and Portfolio Management and has over 20 years of experience in the above areas covering the US and Indian Markets. He has several publications in the above areas. The views expressed here are his own and should not be construed as advice to buy or sell securities.


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Thursday, 14 May 2015

Rounding Top Pattern in the Indian Stock Market Nifty Index Suggests Lower levels for the Nifty in the Months Ahead

The weekly chart of the Indian stock market Nifty index shows a rounding top formation that targets 6000 on the Index. This coincides with a rounding bottom that is forming on the weekly chart in the India Vix which is a measure of Indian stock market volatility suggesting an upsurge in volatility in the upcoming months. The pattern suggests a level of 35 for the India #Vix up over 50% from current levels. This implies significant downside for the Nifty in the upcoming months.
Incidentally the India Vix has traded below the US Vix recently and a catch up to the upside is likely as the India Vix tends to be significantly higher than the US Vix.

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My belief is that stocks are relatively overvalued compared to bonds and attractive buying opportunities can come along after 1-2 years. In a deflationary scenario no asset class does well other than U.S bonds, the U.S dollar and the Japanese yen, so better to be safe than sorry with high quality government bonds and fixed deposits. Cash is the king always. Of course this varies with the person's age.