This Halloween, one grisly (or, grizzly) creature went door-to-door down Dalal Street, scaring the sweet gains out of every financial market that came in its path -- a giant, raging Bear.
Check it: In the last five days of October 2009, India’s Sensex suffered its longest losing streak in 11 months. The massive selloff then culminated in the November 3 event widely known as the Bombay "Bloodbath.” That day, the Sensex plummeted nearly 500 points, alongside a 147-point plunge in the National Stock Exchange Nifty to its lowest level in two months.
In the words of one November 3 news source:
“Anyone who thought the holiday on Monday would save the bulls was in for a rude shock. It was absolute carnage; an outright bear assault. All hopes of a rebound after last week’s declines were completely shattered.” (India Infoline.com)
“Hope”… rapidly followed by “Shock.” And who could blame them? Just two weeks earlier, India’s bellwether stock market was the best performing equity in Asia.
And, according to the mainstream experts, those boarding the bullish Bombay bandwagon were in for a long, uninterrupted ride to new heights. On this, the following news items from mid October say plenty:
- “Indian Shares End Near 17-Month High… Excellent liquidity across emerging markets is driving Indian markets up. The Sensex will reach 18,000 over the next month” at which point, investors should begin to exercise caution and prepare for a correction. (Wall Street Journal)
- “Nifty On Firm Foot. We’ve got over a nightmare of sorts…” (Economic Times)
- “Sensex & Nifty Soar To New 52-week Highs. There is a lot of optimism in the markets and Indian markets are in a long-term bull phase..." (NDTV)
Yet -- soon after, boom turned bust as the Sensex AND Nifty kissed their yearly highs goodbye in a sharp, synchronized selloff.
As for seeing the bear's arrival BEFORE it came knocking on Dalal Street -- here, EWI's October 22 Asian-Pacific Short Term Update set the stage for the coming carnage with the following insight:
"The past two trading days have seen what looks like completed tops. Thus, the potential for declines is increasing. Increased caution toward equities is warranted at this time. India looks to be breaking down following the completion of five waves up."
Soon after, the October 25 Asian-Pacific Short Term Update presented the following close-up of India's Nifty Index (on the LEFT hand-side) and raised the urgency of its analysis with this message:
"India looks especially vulnerable to the downside. This market has had a good run higher and now shows signs of momentum loss. With five waves completed at multiple degrees, it's time to step off the bull train in India, if not time to outright explore bearish opportunities."
Now, the right-hand side of the above picture shows the massive selling that has taken place in the Nifty since.