Review of November Sensex Prediction

For November 2005 we predicted:

"Prediction claissified as medium to high riskThough Sensex has risen more than 180 points in first two days of the month, this will not be the story for entire month.Indian stock market can be expected to close above October closing of 7982 but not significantly above this. However before November 21 market could run up significantly above today's levels amidst volatility which will be most prominent in the mid phase of the month. Last ten days of month could see correction. It will be safe to sell Nifty calls or buy Nifty puts if market runs up in second week of the monthStrangely, there are signs that IT stocks may not do very well this month- ( perhaps on possible rupee appreciation against the US dollar )."

Link to Original November Prediction

Review: The only part of the prediction that went right is the huge run up of Sensex/Nifty just before Nov 21. Hence taking long position at the beginning of month would have fetched huge profits. The only correction that occurred was in last ten days of November- a total of over 350 points starting from November 21 itself but this was more than overtaken by rise. Hence going short before Nov 21 would fetched profits or losses in last ten days depends on specific trading strategy. Overall on basis of these predictions huge profits ( even beyon our expectations!!!) could have been made. Both mid phase and end phase of month were volatile. Please note this monthly prediction was given in the backdrop of net FII outflows in October and consequent pessimistic and uncertain market outlook for November

But IT sector continued to do well and extent of rise in sensex surpassed our expectation/prediction- things we did not predict correctly.

Starpundit