Note : This is not a recommendation and I am not a registered analyst,
these are just data points and an assessment of the positives and negatives
from a longer term point of view.
Nifty Weekly
**Some charts below use moving
averages. Now, with all the destruction - the prices are far below these
averages, so we face 2 choices:
A) Either
we wait for price to catch up to the MA’s – then we might miss out on some
solid gains.
B) Either
the MA’s catch up to price – then we get saved from further losses or a frustrating
range bound move.
Chart 1. Strategy 1 & 2 based on
Nifty TRI – Both are in exit mode and I am in liquid-bees. Bond strategy is still
in buy mode and I am holding a 10Y bond fund. Green line is up means buy mode
and green line at 0 means exit mode. Portfolio return is -14.98% and current
drawdown is 17.21% compared to Nifty ETF return of -31.46% with a current drawdown
of 34%.
Chart 2 Nifty total returns/10 year Bond index ratio is BELOW its 40-week MA &
momentum has shifted to Bonds, both indicating longer term outperformance of Bonds
vs Nifty.
Chart 3 Longer term intermarket strength as per the RS matrix is in FMCG, IT
& Pharma. With Banks and Media at the bottom.
Chart
4 NONE of the broader indices is above their respective 40-week MA, and NONE
of the sector indices is above its respective 40-week MA. Forward returns on
Nifty have generally been negative to flattish at these readings.
Chart
5 Avg. & Median distance of all sectors from their 52-week closing high is
at -39.2% & -40.5%.
