Dear Members,

PSU Bank index - MAY 2017

The PSU Bank index is at the upper end of its range since 2010. Draw a trendline from the highs and we just about kissed it. My sensex is that wave Z down started as shown. This is the last and final wave down for any corrective phase. And while it does not have to be large and can end at the neckline my sense is that it will extend as shown and end with an ending pattern. The entire recapitalisation of a sector is not possible without major write downs and declines in book values and rise in the equity base. This is just logic that anyone should get. What are you thinking? In any case we look at the sectors investment potential only after wave Z down is complete. Right now the upside is hardly any in my understanding of the trendline resistance.

Nifty PSU Bank Index - OCT 2017

The All In trade comes in once in a while, and today everyone is all in. Most bears would have given up on PSU banks after this recent move. But the bigger capitulation is of the bulls. Analysts that write reports are now all at once bullish across the board putting out a report before its too late. As always i never take sentiment lightly. If everyone is all in on a news event it must be wrong. the chart of the PSU bank index gives levels to verify this. The last time I turned bearish on the sector was May 2017, and we came very close to the falling trendline from the 2010-2015 tops shown in blue. But we did not kiss it. With yesterdays move we are above it but will this hold or end up as a Pinocchio bar at the end of the month. The chart shows that if you connect all the highs of the last year then today mornings panic high in the PSU Bank index hit just that line. So a valid move would require us to go above that. Else this would end up being simply wave E of a topping structure and the trend down will resume. This time with everybody all in and buying the dip. [of course not me]

Nifty PSU Bank index OCT 2017

After the spike up wave X that was presumed to have ended at the May top ends now and wave Z down the final leg of the bear market for PSU banks still lies ahead and not behind.

PSU Banks JAN 2018

The PSU banks debate goes on. And flash news gives spikes up that cannot hold ground or are exit opportunities. Again and again. Well times. So when recap was announced for these banks FIIs were reported caught off guard short and forced to cover, and now the Govt is mulling 49% FDI, as per rumours. You mean they will buy and not short. Or double short to buy lower? and if buying 49% equity = portfolio investment or FDI? This whole discussion has gone off the hook.

The chart is clear, the recap news hit the upper line of the highs and prices are selling off since. I am marking this as an expanding triangle in wave E and complete. Next move has been down since. First to the lower neckline of the pattern and if broken then measure the size of the triangle and project downward.

Now lets drill down. Since point E, most PSU banks that I wrote about are making lower tops and bottoms and even today closed below the 20 day average. In other words they are not able to go up much and trailing from averages and heading lower. The wave count shown below shows a possible leading diagonal [wave A, that looks like a falling wedge], that was complete. Today maybe we completed wave B at 38.2% of the wedge. Wave C down is next. If true wave C is faster and achieved 2.618 times wave A in 1/3 the time. This is just past experience with such patterns. Not from any book. And in most cases wave C is extended. So while C=A points to 3080, it should go to 161.8 times A = 2735, and in 3 weeks [wave A is 2.5 months]. Today's close is 3631. For all the PSU banks already discussed watch the 20/40 day averages as the key levels below which the trend is down.

PSU Banks JAN 2018

No change in the big picture for PSU banks [from the earlier post - http://www.indiacharts.com/icjpages/index.php/indiamkts/valuewave/stocks-latest-list/7437-psu-banks-180118], the short term wave B extended to close to 61.8% near 4018 on the Nifty PSU bank index. So staying below this level it should be down hill from here. The announcement yesterday ahead of the budget is good, because now no news should be expected on this front anymore to cause unexpected spikes after this.