Empirical study of Nifty for the period Aug - Oct

In continuation to my previous post on empirical study of Nifty for April to July, I studied Nifty again - this time from July end to Oct (mid - end) for the past 15 yrs. Below, I present my observation of the weekly charts from 1995 to 2009 ...

1. In the year 1995, Nifty rallied from a low of 1009 to make a high of 1042, a net gain of approx 3.25% For convenience I call this year an "U" or upside year.

2. From 1996 - 1998, every year, in the period Aug to Oct, Nifty dipped. The maximum it pared was in 1996, from a high of 1127 in july last week to a low of 850 sometime in the second week of Oct that year. Hence, these years were a "D" or downside years.

3. The year 1999, again witnessed an upside rally of approx 196 points on the index from a low of 1303 to a high of 1499 in the second last week of Oct. An "U" or upside year again.

4. The years 2000 - 2002 again witnessed Nifty to tank each year during the study period. In the years 2000 and 2001, Nifty tanked approx 20.7% each, whereas, the year 2002 witnessed Nifty loosing the minimum loss in all these 15 yrs., a meagre 4.5%

5. Thus, we have a pattern of one year "U" and 3 years "D" from 1995 - 2002. In continuation, we had an "U" upside year in 2003. And this year saw the maximum gain of approx 35% from a low of 1165 to 1574 high in Oct that year.

6. To continue the trend, Nifty was to tank in the years 2004 - 2006. Contrary to the trend, Nifty gained all these 3 years followed by a gain in 2007 as well. Hence, now we have 4 "U" since the logical pattern of 1:3 U-D broke.

7. Coming to year 2008, Nifty witnessed a max loss of more than 50% (high of 4539 to a low of 2253) during the period. Blame it on the bubble burst aand call it a "D"

8. Last year, in 2009, Nifty rallied almost 760 pts. making it a "U" year.

9. Thus look at the pattern again, we had a one "U", followed by 3 "D", again one "U", followed by 3 "D". So far the pattern was complete. To note here is that the last year of the pattern was the minimum loss year.

10. Further, we witnessed a "U" with maximum gain, and the trend changed altogether. The pattern that followed was 4 "U", one "D", and one "U" so far.

11. Are we going to witness a "U" for another 3 years starting from 2010 to continue the pattern ?? Also, I wonder if there is a co-relation in the fact that the min loss and max gain came in the consecutive years. If the case is true, then 2008 was a max loss year, so was 2009 a min gain year ??

12. In both cases, if Nifty follows the trend/pattern, it will be an "U" year in 2010 from Aug to Oct and Nifty rally should be equal to or more than 17% (gained in 2009).

To conclude, if the pattern is honoured, Nifty should gain approx 900 or more pts by Oct this year from the low of 5349 in last week of July '10, which gives a target of 6258 or more on Nifty.

Trade well, trade safe !!!!!





Disclaimer: The said technical analysis is a perception based on various charting methods. Trades on my opinion are to be done solely at your own discretion.