Nifty and Sensex Break Major Support

Today is the day to remember in history for Indian stock markets. The Benchmark BSE Sensex and NSE Nifty both the indexes CLOSED below what could have been ultimate support - the Fibonacci 61.8% retracement of past five year bull market. In other words, the past bull market which made thousands and perhaps millions rich in absolute wealth term is OVER.

BSE Sensex closed at 9771.70, well below 9900 which was the Fibonacci 61.8% retracement from the low 2828.47 in October 2002 to the high of 21206.77 in January 2008. The NSE Nifty was supposed to take support at the 61.8% retracement of the bull market from 920 to 6357 in the same period of five years at 3002.

In my last post I stated my doubt about the markets holding these important support levels and my worst fears came true today. Now that the bull market of past five years is officially over, we should forget it for now and concentrate on the new reality. It does not mean that there will be no upside now, but the fact is even if a bull market starts sometime, it will be all new and will have new dimensions. Also, this effectively means that old leaders like Reliance will no longer be leaders if and when a new bull market starts, although such a possibility of a new bull market is at best bleak for some good time.

The reality is we are in a strong secular Bear Market and there are more chances of it to continue in at least short to medium term. Looking at fundamentals, there may be a time when it is "enough" for the fundamentally "not that bad" Indian economy and we see it going sideways for some time. Historically, Inidan markets are nervous during general elections and this means we should not expect a bull market at least till the coming summer next year.