HELL OF A WEEK THAT WENT BY : JUNE 8 2024

 

#nifty #nifty50  #niftyoptions #electionsindia

Indian general elections conducted once is 5 years ,where more than 600 million voters participated this time , concluded with it results outcome last week that led to formation of a government in one of the world largest democracy.

As expected the Indian stock markets created huge volatility, probably more than previous one decade , where it broke out following exit polls results & very next day crashed nearly 9% when uncertainty over probability of a stable government emerging out of it.But the drama never ended there, market shot up & recovered almost all the loss during the following 3 trading days of the same last week & ended up with hanging man candle stick pattern with a really very long 'wick' leaving behind the trail of all the euphoria & panic , where the both bulls & the bears got trapped . Market participants might have lost in several billions & gained in same during speculative trading all in a weeks time.

On a lighter note, for a change politicians also participated & leveraged by highlighting market election volatility this time.

 

On a week to week basis markets close 3.5% after a remarkable recovery of 9.4% from the dipped of 5.5% from the previous week before doing that. it already gave a clue on technical charts of upcoming crash with a dark cloud cover bearish weekly candle stick pattern. But nobody anticipated the ferocity of the single day fall from it. The total range of price movement was nearly 2000 point all in a week & you could imagine trauma traders in FNO might have faced managing same. 

While all that stock markets looks for is a stable government & once it got some amount of confidence on it , markets shed all the volatility & vix dropped 32% after having shot up 120% during the weeks before election results.

As expected indian markets total ignored global cues previous week & the focus was nothing but election outcome throughout the week. By the weekend we have all the major sectorial indices  heading towards medium term bullishness with respect to momentum & market close inches away from another new all time high hitting the top of trendline channel resistance zone once again.

It is time to exercise caution when every one turns bullish & market remain heated up with regard to valuations & P/E's & what not? There still remain uncertainty as to how would the upcoming new government manage things differently with a coalition . Who would be placed in key ministries/ how would upcoming budget allocations & spending & tax implication turn around with new way of running government unlike how it was in past decade.

Weekly hanging man is merely a "warning" but a bearish pattern only if next week candle "confirms" it with another big bearish candle. it could very well be ignored if price close above the high of it .

Regardless this election market moves where great lesson for market partipants  in many ways ,where it beaten down those who speculated blindly creating euphoria while same time once again demonstrating the strength of indian stock market  ,clearly speaking out what exactly is expected out of such a major event with regard to economy & business & growth