Opportunities in Bear Markets and Consolidations post 1992, 2000, 2008 and 2020.

Opportunities in Bear Markets and Consolidations post 1992, 2000, 2008 and 2020.




In our previous berth Equity-Never been so Bad so Quick. What Next ?~ ATAGEND we looked at how the current fall has been the most wonderful and deepest in a very long time.

Although every Bear Market where Index comes 30 -6 0% and Broader Business 40 -7 0% is different but what we have noticed is the combinations have some affinity.

A consolidation after a big market fall has some common characteristics.

The Leading Sector is not recover faster.( Banks have not been able to retrace 50% but Nifty has) Broader Business not able to retrace and get sideways at relatively low volumes. The Trend Change is confirmed via higher high-flowns. Laggard Sectors and some New spheres/ organize of stocks start picturing persuasivenes and lead varies.

A trend change is confirmed whenever intermediate highs are traversed and trendline breakouts.

This is a Long Post. Do read till the end.

Let us start with 1992 Fall. We do not “ve got a lot” of furnish data but will only look at the indicator.

1) 1992 -1 993 consolidation.

a) The Fall

Generally the descent after a bull market can retrace 50 -6 1.8% of the Bull Market.

In the first precipitate of 40-45% from flower the Sensex retraced 50% of the rally of 1988 -1 992 which was almost 4x from 1988 lows.

By the next two lows it had retraced 61.8% of the move.

Sensex Retracement 1992

b) The Consolidation

From the first fall the consolidation form a come wedge/ triangle previous nearly a year or 49 weeks.

Sensex 1992

c) The Trend Change

When A proof came when the downward trendline and higher top was represented August 1993. In the next one year the Sensex regained previous increases.

Identifying Bottoming Out Patterns handles this topic in details in the – Online Technical Analysis Course

d) Stock Specific Behavior

Generally 50% of the stocks do not clear new lows in the amalgamation as broader grocery vogues to overshoot on the downside in the first die itself.

2) The 2000 -2 003 Consolidation

a) The Fall

The first fall did breather in different regions of the 61.8% distinguish. But affix a improvement it again offset 3 new feet and made a full retracement.

Sensex 2000 Fall

b) The Consolidation

Consolidation 2003

After making a major foot in September 2001 and a 40% ricochet from the lows it attained 2 higher bottoms. The Consolidation previous three years from the 1st freighter and nearly 2 years from the final fanny acquired in Sept 2001.

c) The Trend Change

A trendline breakout from a triangle and a higher high-pitched happened in mid of 2003 and the Index went back to same high-flowns in the next 6-8 months.

d) Stock Behaviour

( The data is only NSE and “ve got a lot” of survivorship bias as it does not consider business delisted, demerged. Also many companies used to be only is available on BSE)

February 2000 to Sept 2001- Sensex down from 6150 to 2600.

Feb 2000 to Sept 2001

58% of the stocks came more than 50%( could be higher as many companies folded .) 47% of the stocks came more than 60% Only 10% had a positive return.

Recovery from the Lows of Sept 2001 to April 2003. Sensex from 2600 to 2900.

Sept 2001 to April 2003

75% of the stocks had positive return and higher then 2001 feet. 46% of the stocks were up more than 50%.( 250 assets .) 25% of the stocks were up more than 100% from the 2001 lows.

Even though Nifty/ Sensex was an increase 10 -1 2% from the lows. Virtually 141 assets or 25% of the NSE stocks had double-faced in those 2 years.

The End of the Consolidation February 2000 to April 2003

Feb 2000 to April 2003

43% of the stocks were down 50% from the 2000 highs. 29% of the stocks had a positive return and had spanned the high-priceds of February 2000 !!

1999-2000 Bull market was IT and Telecom. The remain of the market had already been in a sideways busines from 1998.

d) Sectoral Change

We do not have a lot of Indicator data for 2000 -2 003 but there are some on BSE

1) Autos

BSE AUTO

BSE AUTO fell 60 -7 0% with the Markets but recovered 115% in 2001 -2 002. When Sensex moved from 2600 -2 900 by 2003 this Index was up 75% By 2004 it was up 5x from the lows and 60 -6 5% higher from February 2000 crests.

Capital Goods

Capital Goods

Down 60 -6 5% from the meridian and then recovered 100% from the lows by 2002. Asset Goods was an increase 80 -9 0% by 2003 posterior for Sensex which was only up 10 -1 2% Intersect the increases of 2000 likewise and was up 5x from lows and 60 -7 0% from 2000 high-flowns. The Indicator moved up to 21000 by 2007 and up 40 x from 2001 lows and 20 x from 2003 lows.

BSE METAL INDEX

BSE Metals

Down 55 -6 0% in the fall but recovered 120% and same increases by 2002. Up 80% by 2003 with Sensex only up 12% Up 6-7x by 2004. The Index was up 20 x from from 2001 lows and 10 -1 2x from 2003 lows.

Oil and Gas

The index was also up 70 -1 00% in 2001 -2 002 and 2001 -2 003.

PSU Index

BSE Psu Index

Fell 50 -5 5% in the fall but recovered and moved new increases in 2002. Up 100% from the lows by 2003 and 130% up by 2002. It was up 6x from lows of 2001.

FMCG

The sector transcended out with Hindustan Unilever and made a new low-grade in 2003. Could not bridge 2000 high-priceds till 2005 and Hindustan Unilever was a laggard for a decade. Even Pharma started catching up only in 2004

IT SECTOR- Down 90%

IT Sector

Fall and Consolidation of 2008

a) The Fall

The fall was huge as it retraced virtually 75% of the move. But likewise the rallying was huge as well with Indices up 7x from the lows of 2003.

The first precipitate was of 30% in January 2008 and the final foot in October 2008.

Nifty 2008 Fall

b) The Consolidation

Lasted only for 5-6 months from October 27 th to March 2009 with nearly similar fannies on closing basis and 5-10% higher on lows.

c) Stock Behaviour

Jan 2008 to October 2008- Brutal

2008

87% of stocks were down more than 50%. 79% of stocks were down more than 60% 60% of stocks were down more than 70%.

October to March 2009

October 2008 to March 2009

30% of the stocks saw brand-new lows. 28% of the stocks were higher than 25%. 70% of the stocks were higher by the 2nd dip.

Sector Change




Real Estate/ Infra get smacked 70 -9 0 % in 2008 and Capital Goods also has been an underperformer ever since. FMCG, Pharma, Consumers. Home Building Fabric, Chemicals, Banks and Financials made cause in the coming decade.

The Fall of 2020

a) The Fall

In percentage terms the come maybe 40% but it has retraced 50% of the move from 2008 and 61.8% from the lows of 2010-2011.

Nifty 2020

b) The amalgamation

The big question is have we attained the bottom, or the next foot would be a doubled trough or we have a few more legs to go. The retracement has been gigantic just like previous bear market but its not a 60% drop like 1992/2000/ 2008. So for that reason most bearish apprehensions are placed at 6400 -8 500 where 6400 is the peak of 2008. But the stock behaviour is very close to the descends of 1992/2000/ 2008. That indicates we are getting into amalgamation and may have just one more down leg which might have started from 9900.

c) Stock Behaviour.

2018-2020

79% of stocks are down more than 50% 70% of stocks are down more than 60% 56% of stocks are down more than 70%

Price damage is almost same to 2008.

d) Sector

Out of previous sectoral changes what we have seen is some thoughts to catch the next sector. New Sectors may have many brand-new registers or fellowships who come out of nowhere or transform. Wipro was not an IT co.

IT and Telecom was a brand-new sphere in the late 1990 s Old Economy were laggards which did well in 2003 -2 007. Real Estate and Infra were new spheres. Pharma and FMCG were laggards of 2002-2010. Chemical were laggards. AgroChemicals a New Sector. NBFCs was a brand-new area with new words. Bajaj Finance was a demerger. some were agents before.

Going forward it would be a good time to look at laggards and brand-new sectors or even Old Heroes which have lived. Price Action will be an important thing watch together with Sector Reasons,.

Conclusions

We compare current bear market to previous bear markets as equity sells go through hertzs and one can find same attitude in subsequent hertzs. For example in 1992/2000/ 2008 the Index descended 55 -6 0 %. The passing areas Plasters of 1992 or IT of 2000 or Infra/ Real Estate of 2008 descended 70 -9 0% and numerous never came back. Likewise after a big bear market where 70% of the stocks have descended more than 50% like in previous repetitions the consolidations last long and then brand-new lead areas surface. Many bear markets coincide with Events- September 2001 terrorist attack, Global Financial Crisis 2008 and Covid1 9 in 2020. A lot changes in the short term, some in medium term and in long term we get back to human nature.( After 2001 a lot of security systems converted, After 2008 everyone was Debt Averse, EMIs and Debt came back in few years, Lockdown has shown us how little we need to live but is that the Life we Want ?) Nifty might have started a bear market in 2020 but the Buoyant move of 2018-2020 was very narrow and broader markets are in a bear market since 2018. Price Fall is similar to 2000/2008 for broader sells. Like in 2000-2003 the Index took a long time to bottom out but a lot of sectors and assets did big moves. Some chip of affinity with 2000 -2 003 is possible in broader market action. There is one section of the large cap, enormous caliber midcaps and strong firms which are priced to perfection- A lot of FMCG, Paints, some Chemicals, some Pharma. some Consumer etc.Lot of herding in many Midcap mentions with MFs own 15% of equity and FIIs own 5-10 %. Here i am other slouse of identifies in Smallcaps, Midcaps and many sectors which are priced for Liquidation.( Not exactly below Replacement cost but below Liquidation Value .) FII supporting in BSE5 00 is back to the lows of December 2013 of 20% and in overall Total Sell Cap down to 18 -1 9 %. Previously low-grade was 16 -1 7 % in 2008 feet. Over the next few months and times there will be a lot of opportunities due to mispricing but a bigger opportunity when the combination is over. This is the time even though they are you do not buy but you need to keep researching suggestions, sectors. Some terms a lot of bull market spheres start not just because of the greatness of that sector but consolidation and insolvency of a large company in the sector. There could be numerous rationalizations. But after a Bear market we do envision new opportunities “re coming”. Some Examples

1) Cements were laggards announced 1992 but did well in 2003 -2 007.

2) PSU Stocks, Metals, Capital Goods and a good deal of Old Economy stocks “ve done nothing wrong” in 1990 s but went 20 -1 00 x in 2003 -2 007.

3) Pharma and FMCG was supposed to be Defensives. Went 10 x-2 0x in 2010 -2 015 even when Nifty was not doing well.

4) Chemicals were merchandise companies and did nothing for 2 decades and now are speciality firms.

5) NBFCs more get scheduled and delisted in 1990 s but in the last decade but did awesome between 2014 -2 018.

Also in the interim period of Consolidation there could be a lot of opportunities because of severe mispricing and agreements. Some can be cash agreement, some agreement coz of a ardour sale by foundations, Insider Buying, Buybacks. These require a lot of research and conviction. The buying has to be done at times patiently and at times urgently. You may research a great deal but not catch a lot, due to uncertainty/ horror but these same epithets researched now will assist in next cycles/second. I retain buying Garware Wall Ropes at 44 as a bargain with 4 PE and 6% furnish, aarti Inds at 6 PE and transformation but later in 2014 at 3x-5x higher there were different concludes to buy- swelling, caliber, area tailwinds etc.

What Next- My Thoughts?

Over the next 2-5 years there could be some sectors which could take up leadership due to various intellects. Some times brand-new sectors come from New enumerates and some times from laggards. Every Bull Market one realizes mistakes( I have stirred plenty, down 50% from top. Highest drawdown since 2013. ). A Bear Market hurts you in various ways apart from the Equity Portfolio. Like today I do not understand what preserves me more worried my PF, Business or Covid1 9. Going forward there could be a lot of Job Losses and Business Damage more.( Do read this it will help – https :// www.safalniveshak.com/ you-lost-your-job-now-what /) Its generally said Marketplaces discount the future and the sharp fall in so many companies is an indication that things will now actually be tougher for a lot of jobs, businesses and more. A plenty of businesses, Jobs get hit due to absolutely no mistake of theirs. A performing friend lost a job because his Promoter had to shut down the profitable company due to lack of funds caused by a big hit in another business. Receivables and Bad Debts of private individuals/ firm can affect other customs. Tourism, Aviation, Hospitality, Oil related and so many other sectors will get hit.( Some of my views ought to have lashed .). A taken into consideration biography tell me something- Nothing Last Forever. I am not aged enough to have seen previous repetitions but some things which I retain about how you get hurt in various cycles/seconds and recovery.opportunity too comes from unexpected lanes.

A big flashback

Made money doing Advertisings for Dot Com Fellowship and Marketing Surveys for Brands in 2000 -2 001. By 2002 when I attached engineering there were hardly any placements. We had previous year alumnus as our Teachers due to lack of opportunities. I used to earn more than 50% of an Designer offer throwing Private Tuitions for a couple of hours daily. By 2005 majority decisions of our quantity was placed with employment opportunities in 3rd year of Engineering and results of 5 semesters. Was on Bench for 90% of my 6 months IT Job in 2006.2007 was a super bull year and business did well for us. By 2008 -2 009 Engineering Grads and MBAs had a tough time getting a errand and even Job renders came delayed.Friends in US had to do strange tasks after Masters for some time. A much of people got laid off in 2008 -2 009 but fortunately it should not been a long time. Portfolio got hit, Business reached and some money stuck in a Co-Op Bank which get taken under by a PSU Bank. 2011 -2 013 some layoffs happed in Equity Broking Cos. The whole example of Sub Broking got marred who were a big mount of our buyers. Started a jeopardize in Broking and closed in 6 months. By 2013 Portfolio, Business got hit. 2014 -2 017 was prosperous for countless manufactures peculiarly Equities. Since 2018 its been tough for people like me in Equities and upright Covid1 9 is going to be tough for a lot of Businesses.

The worst road to deal with such a crisis is to compare your current state with what you had. For example a portfolio down 50 -6 0%, A settle cut, Dwindling Business will get compared to the Peak of last couple of years- Portolio Peak, Appraisal/ Bonus, Super Profit. The other mode to look would be what do you have now and how long are you able survive on it. In that existence span one needs to grind out, hustle, re-skill etc. Also in such points one can definitely increase Work-Life Balance. A heap of beings will suggest how one needs to be positive and numerous things. The fact is one is bound to be worried with so much better happening around. Concerned about but not Chilled !! Keep faith and self-belief. Another behavior to deal with it is to focus on your pastimes and family. So find ways to spend your time which gives you psychological prosperity.( This date has been tougher for me as in earlier rounds would play a good deal of athletics. Now playing with twin boys is fun but persisted at home .). The Consolidation seasons are lengthy and tiring. A parcel of passions at play-act everyday. Patience will get tested. History also registers – Post such stages there comes a period of super opportunities. These possibilities give you enough chances to recover way beyond your mistakes. “Its time” where a great deal of hard work will go into researching, reskilling, construe, learning and so many other things but no gratification or causes in near period. But eventually it is these periods which decide how you will be able to do better in coming years. Focus on what you have and what you can do over the next numerous months in various facets of life and not just Financials, Job, Business. Do not lose faith, self- belief and soundnes. Stop over-thinking. Keep it simple. Best Cares to Everyone.

Suggestions for Me.

Personally have found it difficult to do any long the curricula of combinations.( bot CFA bibles in 2007, Enrolled for CFP in 2009, Small Courses on Finance through 2011 -2 018 and met a lot of parties .) So would desire if you think any route/ book/ podcast which is helpful in me learn- Please mail to nooreshtech @analyseindia. com From our place we are trying to create content for study for blog books.

Youtube Channel& Posts( Please mail for topics you would like us to cover)

My firstly youtube video was in 2008 and Webinar in 2009. Have been intermittently reach some in between. Me and my crew teammate Harsh Doshi will be manufacturing few videos over next countless months for self-learning as well as for others. Some videos already realise.

Some videos constituted.

1) How to Track Business Using Google Sheets

2) How to Analyse Delivery Volumes

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4) How to Track Marketplace Using Google Sheets

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