This year was a topsy-turvy roller coaster ride, where economy and stock markets had biblical gaps.
Thousands of people lost their money on tips from brokers, news, relatives, channels and what not, but those who had their strategies lined up in execution mode reaped phenomenal profits.
So let’s rewind the important events this year and understand what you should take away from it…
Market Movement round the year, 2020:
A: Jan 20, markets touched all-time high.
B. Index value went below 200 Moving Average marking the change in long term trend from bullish to bearish.
Red Zone: Third and Fourth week of March onwards global lockdown began; Fifth week of March marked starting of Indian Lockdown
C. March 23rd, Nifty50 hit Lower Circuit first time after 2008, the markets recovered sharply after the circuit. Nifty hit 52 week low of 7511 pts.
D. Dow Theory first significant peak formed; first indication of bull market.
Yellow Zone: 12 March, Stimulus Package of 20 Lakh Crore Rupees was announced by Indian Govt.
E. Index value went above 200 MA, marking the change in long term trend from bearish to bullish.
F. Dow Theory second significant peak formed; indicating strong bull market ahead.
G. 18 Dec Markets are at an all-time high again.
These were all the major events, now lets see what you should learn from this years market movements (this is most IMP part).
Take away I: Fibonacci Retracements
As per historical trends and analyzing past crashes…
It has been observed that if Nifty sustains the 0.5 level after a crash, it usually sustains the momentum to rise. This analysis has also been found to be true in this case, marking our tagline,
”Stock Markets cycles keeps on repeating itself!”
Take away II.A: Nifty Pharma- The top performer
Point A: Dow Theory’s first significant peak formed; Clear buy for Nifty Pharma Fund buying.
First week of 2020: +60.19%
200 MA crossing on weekly timeframe: +34.46%
200 MA crossing on daily timeframe: +58.88%
Maximum return from All Time Weekly low of 2020: +89.47%
Maximum return from All Time Daily low of 2020: +100.69%
Take away II.B: Nifty FMCG- The second Fiddle
Point A: Dow Theory first significant peak formed.
Point B: Dow Theory Second significant peak formed; Clear buy signal
First week of 2020: +12.33%
200 MA crossing on weekly timeframe: +22.73%
200 MA crossing on daily timeframe: +15.30%
Maximum return from All Time Weekly low of 2020: +32.54%
Maximum return from All Time Daily low of 2020: +47.15%
Take away III: Long Term Govt. Bonds Performance
The interests earned on bonds fell drastically from 6.82% to 5.81% over Jan to July, whereas it improved a little from July to Sept from 5.81% to 6.03%.
Take away IV: Fall of Interest Rates, Inflation and GDF:
Charts A and B: As per central bodies for finance the cut in interest rates were an accommodative measure to sustain economy in the time of high inflation and pandemic.
C: The inflation rates in 2020 went skyrocketing high as it broke 6 year high at 7.61%. Breaking expectations of RBI it exceeded the 2-6% slab for eight straight months.
D: This year GDP went for a swing due to industrial disruption, only agriculture sector went up. The negative growth triggered by pandemic and high inflationary pressure was balanced by stimulus package, revenue generated by skilled professionals, agriculture and resumption of services in remote mode.
That’s all people! A very prosperous and profitable year is waiting for you ahead. Stick to your goals and strategies and no one will be able to stop you!
Your success is inevitable and we love you!