Nifty Cyclical Moves/Time cycle corrections

While its important to look at prices, its also important to look at time cycles. Some times time cycles works better than any other technical phenomenon. Trading or price movement is basically an outcome  of traders behavior, psychology or emotions and its often observed that a particular behavior or emotion can only last upto a certain period or time. Hence at times we keep seeing rallies even when news flow is bad and keep seeing selling pressure when everything is good.

As per our views and observations, we have seen that markets usually follow 3 time cycles for corrections

1.Very rare:.50-60% These are basically stock market routs and are not very common

2.Rare: 25-30% corrections-these are some big corrections and are often seen once in 3-5 years

3.Common : 10-15% Correction- which can be termed as commonly occurring or business as usual and often see almost every other year

No.3 (10-15% correction) is pretty common so we are not going to discuss it but lets see a bit more of no.1 &2.



Nifty

Very rare 50-60%:  These are stock market routs which comes and changes the entire perspective or gamplay. Impact of such corrections are huge and their impression can be felt for years to come. Like we said such corrections are pretty rare and in our Indias context these are seen once every 8-10 years.

• First one was in 1992 ( the Famous Harshad Mehta scam) when stock market had lost more than 50%.
• Second rout came exactly 8 years after in Year in 2000 ( dot com bubble): when sensex fell from 6K levels to less than 3K
• Last rout we saw was way back in 2008 (Housing /Lehman Bros crisis) When there was a deep correction of 60% and Senses plunged from 21K levels to less than 10K & Nifty from ( 6k to sub 3k).

Looking at time cycles one can argue that another stock market rout is already due &  it remains to be seen if it comes and what will be the news/root cause behind it.

Rare 25-30%:Another mid level correction which is often observed is 25-30% these are not very common but still observed after 4-5 years. Since 2008 we have observed this correction twice.

• Once in 2010-11 when Nifty fell from 6k levels to less than 5K
• Second in 2015-16 when Nifty fell from 9k levels to 7k levels.

Looking at these time cycles one can argue even the 25-30% correction is due now in 2019. However keep in mind we have already seen a correction of 15% ( from top of 11750). So it remains to be seen what we are witnessing now remains a normal correction ( 10-15% which is already done) or turns into something bigger ( 25-30% which even current time cycle are projecting) or turns into something even  bigger and catastrophic and just destroys everything.

Just a food for thought!