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Weekly Insights #12- Interesting Indicators of Market Top

Back in end of Aug’21, I had a group call with some fellow investors wherein we were discussing everything markets. One observation that I shared during that discussion was how a lot of investment/holding companies were suddenly moving higher & breaking out.


One of the investors who has a lot of market experience quickly commented that such move in investment/holding companies is typically a sign of market excesses.


At that time, I didn’t really paid much heed to that comment, but looking back it looks to have played out so well; our markets topped out just a month later in early Oct’21.


Now this could be something like a one-off or a coincidence of sorts. But as with most indicators whether technical or fundamental, nothing works perfectly in isolation. It is when many varied indicators point to a same event is when the probability of that event actually materializing is the highest.


And thus, this holding/investment company indicator is something that I have added to my arsenal of possible indicators of market tops; which includes the following (but not limited to)-


1. Heighten IPO Activity including-


2. When people stop paying attention to risks


3. New Metrics


4. Sectoral Tops

If a lot of new sector specific new fund offerings or new listings starts happening, then that is typically a top for that sector.



Let us know in the comments section if you know of any such interesting indicators.



That’s it for this week, new insight coming up next week. So stayed tuned!


 

Surge Capital is a trade/brand name used by Ankush Agrawal (Individual SEBI Registered Research Analyst INH000008941) to provide equity research services in the Indian Equity Markets.


“Registration granted by SEBI, and certification from NISM in no way guarantee performance of the Research Analyst or provide any assurance of returns to investors”


“Investments in securities market are subject to market risks. Read all the related documents carefully before investing.”


“The securities quoted are for illustration only and are not recommendatory”


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Hi ankush

Recently some of the holding companies have started gaining momentum. When I observed this happening , i remembered your this article. Would love to hear your views on this .

Thanku

Chetan

RRRRR

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Surge Capital
Surge Capital
Sep 13, 2023
Replying to

Hello Sir,

Yes that is a good observation. But always remember that just one signal by itself is never an indication of something big. You have to collate a number of smaller signals which points in the same direction and that is when you get a good strong signal of what might play out.


But there is this news going around that SEBI has come around with some consultation paper on delisting and that is leading to this move in holding companies.

Link- https://www.sebi.gov.in/reports-and-statistics/reports/aug-2023/consultation-paper-on-review-of-voluntary-delisting-norms-under-sebi-delisting-of-equity-shares-regulations-2021_75335.html


So this time the reason might be different here.


Also, I am personally seeing the IPO point playing out a bit as well currently.


Hope this helps.

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Nicely written. A new indicator to assess the market top. Also including other indicators are helpful for me as a retail investor. Look forward for such insights in future as well.

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