Nifty - Labored Move and Walking on Thin ICE....

MOST OF THE BIG PRICE MOVES ARE LOST IN SEARCH OF EXPLANATION TO THOSE PRICE MOVES......

O ASHUJI.....

June-December 2012 and January 2013 - Tale of different time frame within same rally.....!!!

Nifty made low of 4770 on June 4, 2012, along with most other world markets. From the low of 4770, Nifty has rallied to around 6050 (gain of around 27%)...again like most other markets. Lets look at the stocks that participated in June-Dec 2012 rally and compare the same with stocks that rallied in Jan 2013.

Nifty Stock Performance during June-Dec 2012 and Jan 2013

1) Top Performing stocks during June-Dec 2012 have greatly under-performed Nifty in January 2013. In fact, out of top 10 gainers during June-Dec 2012 rally, 7 have registered negative return in January 2013. 

2) Top Performing stocks in January 2013 have been among the worst performing stocks during June-Dec 2012 rally. Out of top 10 gainers in Jan 2013, 2 stocks (BPCL and Infosys) registered negative returns during June-Dec 2012 rally when Nifty grew 20%. 

Top Gainers during Jan 2013....

1) Out of 21 trading days in January 2013, Nifty had 12 positive trading days. There were hardly any days  wherein banking stocks led the Nifty. Primary theme running through these gaining days was Oil&Gas stocks. Reliance Infra was frequently part of top gainers (Reliance Infra is -ve for the month now). While on most days we had stocks from Oil & Gas (ONGC, BPCL, Cairn and RIL) as part of top gainers. 

OIL & GAS - Diesel Price Hike and Volume-Price Peaks.....

1) BPCL, ONGC HPCL and GAIL peaked or made marginal highs following day from the date of announcement of price hike. RIL peaked on the day of announcement of results and since have given up all gains. 
2) Except ONGC, other stocks have corrected significantly from the day of announcement. ONGC has remained flat since day of announcement. 


Conclusion

1) Set stocks leading June-Dec 2012 rally have been among the worst performers in Jan 2013 and vice versa. This is indicative of stock rotation. 

2) Most stocks/sectors have made peaks with peak in volumes on the day of announcement of results or sector related announcement. Case in point being IT, OIL and Gas and Today could be Banking. 

3) Nifty move to highs has been extremely labored and Narrow (with different set of stocks leading to marginal highs)
4) All the above indicates more of topping process and extremely fragile market. 

Big Move Coming in Nifty

Dec 2012 and Jan 2013 (so far...) has been the most compressed months in Nifty Since 1995

One of the ways to measure volatility of stock market for a particular month is to look at high-low range.
Lets look at Monthly High-Low range for Nifty Since 1995 and draw some inference (if we can)

Nifty High Low Range (%) Since 1995

 1) Red Box indicates range less than 3%, Yellow 3-4% and Pink 4-5%.
2) There have 5 months since 1995 which had monthly range of less than 3%. 2 of these months have been Dec 2012 and January 2013 (so far...)

Lets look at what market did in terms of high-low range and % move in the following months (i.e months following compressed months)

Most Compressed Months in Nifty since 1995

1) August 2001, February 2005 and August 2010 were the months prior to December 2012 and January 2013 with high-low range less than 3%. 

2) As we can see from the table each of these months were followed by sharp moving market in the following months with big high-low ranges. 

Profiting from Range Expansion in Nifty

Though, one get reasonable comfort from the conclusion of bigger move coming over Feb-March 2013, direction remains a dilemma. Constant intervention by government and/or central bankers have continually postponed natural market reaction. While most central bankers are looking at asset prices to fuel consumption unlike real income growth in good old days, Indian Govt is looking at market to bridge fiscal deficit. So, though correction is most likely outcome, Govt and/or central banks can have their way little longer before natural force of market takes over. Options can be a good way to play this expansion in range. Without taking a view on direction of market, one can buy pair of call and put. 

Pair buying primarily involves buying call put certain % away from spot. 2 pairs have been considered - 3% and 5%.

3% Pair (6300 Call + 5900 Put)

5% Pair (6400 Call + 5800 Put)

5% pair is more profitable for move larger than 6%. This is due to higher IVs (Implied Volatility) for deep out of the money options.

NIFTY VOLUMES PICKING UP AND FILLING UP LAST MISSING PIECE IN SIGNS OF TOP

As discussed in last note (http://speculationanart.blogspot.in/2013/01/small-mid-cap-froth-adds-to-nifty-worry.html) dated 9th Jan 2013, only missing piece from signs of meaningful top formation was spike in Nifty Volumes. Let us see how volumes have done since then. 

Signs of TOP


FROM LAST NOTE...
Only thing missing for meaningful top is spike in Nifty volumes (though not necessary). If we were to have spike in Nifty volumes and then reversal, case for top will be strengthened significantly. 

What does volume says.....

A) Capitulation both buying and selling can be observed through spike in volumes. 

B) once a price trend has been in place, spike in volumes typically indicates end of trend (short/medium or long term). On other hand, spike in volumes in flat to downward market is typically sign of new trend. Let us see this through actual Nifty data. 

1) The above table contains daily average traded  shared during respective month. Average shares traded has been used because there were wild swings during 2008 and 2009, thus making value comparison distorting. 

2) As can been seen from the table, volume spiked in Nifty  towards 2008 end (selling capitulation - buying opportunity sign). Nifty had been falling since 2008 start, thus volume spike indicated selling climax. 

3) Post the spike Nifty was essentially sideways from Oct-Dec Bottom. Volume spike during Apr-May 2009, thus indicated start of new trend. 

4) Since May 2009 spike in Nifty, Index has been trading in wide band of 4500-6300. however withing those bands, Nifty peaks occurred with spike in volumes. November 2010 and February 2012 were each month of peaks and spike in volumes. 

C) Each of the peak month November 2010 and February 2012 had spike in volumes across Nifty, Mid Cap and Small Indices. This typically indicates "all in" or buying climax. Nifty was followed by sharp correction in following months.

CURRENT SCENARIO

Nifty volumes have considerably picked up in last 2 days. Though 11th Jan volume was largely attributable to Infosys. But volume nonetheless are showing signs of pick up. If we have follow through in volume activity in Nifty, that would indicate we are about to make meaningful top in market. 

Conclusion

Nifty volume pick up would complete all signs required for meaningful top, which should be followed by very meaningful correction. 

Small-Mid Cap Froth adds to Nifty Worry !!! TIME TO BE VERY CAUTIOUS

SIGNS OF FROTH IN SMALL CAP STOCKS

Few signs of worry from June 2012 low rally

1) Average daily turnover for Nifty stocks peaked in Sep 2012 and have gradually come down from those levels. Average daily turnover for Nifty was Rs 6500cr in Sep 2012, with Oct, Nov and Dec being Rs 5800cr, Rs 4800cr and Rs 5200cr respectively. For Jan 2013, so far it has been Rs 5000cr. 

2) Average daily turnover for NSE Mid Cap and NSE Small caps have continued to rise since Sep 2012. With December 2012 being significantly higher than previous months. December is seasonally light month, hence easy to play around with small cap and mid cap. However volumes have risen sharply since sep 2012. 

3) Avg daily turnover for NSE Mid cap stood at Rs 1863cr significantly higher than Rs 1229cr and very close to Rs 1941cr recorded during Feb 2012 peak. Just to show difference in volume in mid cap vis a vis Nifty - Nifty had average daily turnover of Rs 9000cr during Feb 2012, while this september 2012 (peak volume month) it stood at Rs 6500cr. 

4) NSE Small cap is even more interesting. NSE Small cap volume data is available from April 2011. NSE Small cap surpassed its Feb 2012 peak in terms of shares traded during Dec 2012. while so far in Jan 2013, it has surpassed its Feb 2012 peak both in terms of Volume and Quantity. 

SMALL CAPS LEAD MID CAPS AND MID CAPS LEAD LARGE CAPS IN TERMS OF VOLUME.....!!!

Such interest in small cap and mid cap typically comes once price move has already happened. I Selected few stocks from list of stocks hitting 52 week/all time highs. 

Froth ???

1) Interestingly, 16 out of the above 26 stocks are NBFC. 

2) Observe the sharp move in most of them post September 2012. 

SIGNS OF TOP

Only thing missing for meaningful top is spike in Nifty volumes (though not necessary). If we were to have spike in Nifty volumes and then reversal, case for top will be strengthened significantly. 

Nifty Mid Cap Volumes Tell Different Story !!!

NIFTY MID CAP VOLUMES LEAD NIFTY VOLUMES

Price, Volume and Time (PVT) are the only drivers for markets. Rest all is rationalization. PVT always foretells about turning points.

The idea of the post is not to arrive at any conclusion but rather present a picture of Nifty peaks and behavior of volumes (value and quantity).


Nifty Peaks and Volumes

1) Typically prior to peaks volumes are much lower with sudden burst in volumes. Post peaks volumes again tappers off and comes back to pre peak levels.

2) Post 2007-2008, Nifty peaked precisely in the month of peaking volumes .i.e both during 2010 November peak and Feb 2012 peak. During 2007, volume peaked in October 2007, while Nifty peaked in Jan 2008.

3) Nifty's recent high has happened after volume peaked in September 2012. However, interesting developments happened in Nifty Mid Cap with respect to volumes.

Nifty Mid Cap Peaks and Volumes

1) Nifty Mid Cap recent behavior is very different to Nifty with respect to volume action. Nifty and Nifty Mid cap typically peaked together both in terms of volume and price till now.

2) Recently however, Nifty volume peaked in September 2012. while, Nifty Mid Cap Volumes have continued to expand post sep 2012. December 2012 average daily volume stood @ Rs 1863cr ( vs Rs 1484cr for September 2012)

3) Nifty's daily average volume during Sep 2012 was still far below daily avg volume during Feb 2012 peak (Rs 9k cr Feb 2012 vs Rs 6.5kcr Sep 2012), while Nifty Mid Cap volumes are very close to Feb 2012 peak (Rs 1941cr vs Rs 1863cr Dec 2012).


The above data could mean following....
1) Retail participation is very much there (which is required for meaningful top). 

2) Nifty made recent high on much lower daily average volume compared to previous peaks. 

Market Turning Points and Expert Views !!!

MARKET TURNING POINTS AND EXPERT VIEWS

Someone has rightly said Business channels should be purely for entertainment. Must say it has huge entertainment value. It is widely known that market moves against consensus but acting against consensus is most difficult. I have tried to compile various expert views on Indian markets (Nifty) at important turning points and same was then compared with how market fared in following month/s. 

For the purpose of entertainment oops study....we have taken period leading upto November 2010 peak and Feb 2012 peak. This comparison is then followed by brief of expert views on current markets. 

source of views from experts - www.moneycontrol.com

ANALYZING PERIOD LEADING TO NOVEMBER 2010 PEAK

1st June 2010 Nifty @ 4970 down 2.3% (May 2010 @ -3.6% and April 2010 @ 0.6%)

Expert views  during June 2010

1. 4400 on Nifty good buying opportunity - Emkay (2 June 2010)
2. Risk aversion back, mkts may fall 20-25% more: Newedge (2 June 2010)
3. Nifty may slip to 4400-4600 levels: Sampriti Capital (3 June 2010)
4. Mkt to remain rangebound, won't break 5400-5500: IL&FS (7 June 2010)
5. See Nifty in 4200-4800 range over 2 qtrs: Anand Rathi (10 June 2010)
6. Nifty unlikely to cross 5200: MF Global (11 June 2010)
7. Nifty unlikely to break 5250-5300 convincingly: Dalton (17 June 2010)

Nifty Hits High of 5353 on 21st June 2010 up 5.2% for June 2010

Experts view during last week of June 2010 post Nifty hitting high of 5353...

1. Nifty upside capped at 5400-5500 levels: Sampriti Capital (21 June 2010)...same guy was looking @ Nifty slipping to 4400-4600 on 3rd June 2010.
2. See Nifty at 5,450-5,480 levels: CK Narayan (21 June 2010)
3. See Nifty heading towards 5450 in coming months: KR Choksey (21 June 2010)...it's very gutsy to give call of 2% rise in Nifty over few months !!!
4. See Nifty around 5400-5500 by July-end: Prabhudas Lilladher (24 June 2010)....Another Gutsy call !!!

Nifty ends @ 5313 up 4.4% and 1st June was the month's low.

July Nifty starts @ 5313...

Expert views during July 2010

1. Nifty to test 5500-5600 levels in July series: Quantum Sec (2 July 2010)
2. See Nifty in 5100-5400 range in July: Prabhudas Lilladher (5 July 2010)....not sure about anything then give 2-3% range....
3. Won't rule out a 15% fall in mkts over 2 months: JM Fin (6 July 2010).....Market rules him out over next 2 months
4. Expect mkts to head south from current levels: Anand Rathi (6 July 2010)....Same guy had given range of 4200-4800 over next 2 quarters on 10th Jun 2010....oops !!!
5. See Nifty at 5500 by July-end: Prabhudas Lilladher (12 July 2010)....oops week back I had said range of 5100-5400 in July but now market is @ 5400 so I change my small scale ranges...!!
6. Earnings downgrades may push Nifty to 5000: Sampriti Cap (29 July 2010).....Market has been against me...so I will screw earnings now...

July 2010 Nifty ends @ 5368 up 1%

August 2010, Nifty starts @ 5368

Expert Views during August 2010

1. Stay clear of SBI and Axis Bank: P N Vijay (3 Aug 2010) (our special chief guest)...both stocks made all time high over next 2 months rising 24% and 13% respectively.
2. Nifty headed towards 5550-5600 in next few weeks: Karvy (5 Aug 2010)...Nifty stood @ 5468...Gutsy to give rise of 2% over few weeks..!!
3. Nifty may hit 5560 soon, then correct: KR Choksey Sec (10 Aug 2010)...Nifty was @ 5450
4. Markets may remain ranged for rest of the yr: Blackstone (13 Aug 2010)....Nifty rises sharply in Sep and goes close to all time highs...Because markets were ranged for last few months, Lets extrapolate that for entire year...
5. Mkts headed lower this yr on dull eco data: Centrum Broking (13 Aug 2010)
6. Nifty may slip below 5K if 5350 is broken: Karvy (17 Aug 2010).....1 week back same guy had said Nifty heading to 5550-5600...

Nifty corrects by 2% over last week of August2010 and all experts now give their even more accurate views

1. Nifty may correct to 5000 mark: Nilesh Shah (23 Aug 2010)
2. How to get ready for a market correction (CNBC Debates on 25 Aug 2010)
3. Markets likely to see a corrective fall: Deven Choksey (26 Aug 2010)
4. Sensex ends below 18K: Experts see further correction (27 Aug 2010)....Experts are always right...market rises by 12% in September 2010 and experts parties....!!1
5. Nifty likely to be volatile, may touch 5100: Dilip Bhat (27 Aug 2010)
6. Mkts may correct 5-7% soon, MFs to stay in sidelines: Emkay (30 Aug 2010)

SEP 2010 Market rises by 12%

Expert Views Post Market rise of 12% in September 2010....during October 2010

KR Choksey Sec sees mkt hitting 6300-6400 soon (5 oct 2010)...Nifty was at 6150...so huge upside tgt of 2-3%..

Mkts may correct 8-10% in 2 months: Prabhudas Lilladher (5 oct 2010)

Sharyans Resources doesn't see rally fizzling out soon (6 oct 2010)

See a lot of unused cash coming to India: Edelweiss (8 oct 2010)

Nifty may test 6700-6800 by Dec-end: IL&FS (13 oct 2010)

Why Anand Tandon sees ghost of '07 haunting markets now? (14 oct 2010)

Fortune Fin says India best among EMs, bets on metal stocks (14 oct 2010)

Markets likely to correct 4-5%: Sampriti Capital (18 oct 2010)

Nifty to rise sharply after correcting to 5800: IL&FS (27 oct 2010)

See sharp slide if Nifty breaks 5800: Karvy Stock Broking (28 oct 2010)...Nifty@5988 and rise to 6300 over next 6 trading sessions and peaks @6300odd on 5th Nov 2010..

Expert Views during 1st half of Nov 2010 (Nifty peaks on 5th Nov @ 6312)

Mkt not riding on euphoria; will hit new highs: Dimensions (2 Nov 2010)

QE2 over $2.5-3 trn may trigger major mkt surge: Veda Invst (3 Nov 2010)

Nifty may eye 7000 by Jan, RIL to lead rally: Gautam Shah, JM Financial (3 Nov 2010)

Samir Arora bullish on markets with 65% net position (8 Nov 2010)

JM Fin sees Sensex above 23K by year-end, bets on banking (10 Nov 2010)

By 19th November 2010, Nifty is below 6000 and experts pick up near term bottom yet again....

Expert Views during last week of Nov 2010

1. Banks can correct 5-10% from current levels: Edelweiss (22 Nov 2010)
2. Atul Suri sees Nifty touching 7050 in 6 months (23 Nov 2010)
3. Mkts may fall below 5900 by month-end: Motilal Oswal Sec (23 Nov 2010)....Nifty stood @ 5935
4. Mkt may hit 5400-5500 in worst case: Dalton Cap (29 Nov 2010)
5. Anand Tandon optimistic on near-term mkt pullback (29 Nov 2010)

Market rises by 4.6% in December 2012 ending year at 6135

ANALYZING PERIOD LEADING TO FEB 2012 PEAK

2011 was wild year with market having wild swings but year ending with fall of 25%. It had highest ever 8 negative months in a year. Even 2008 had 7 negative months. It was one of those rare year with negative December. H2CY11 was wild with August ending 9% down followed by flat September. October swung to 8% return, while November was disaster at -9%. entering December pessimism was extreme. let's review expert opinions during Dec 2011.

Expert Views during second half of December 2011...(Here we are Markets down close to 25% for the year...preceded by 10% fall in November 2011) 

1. A buy on this market doesn't exist: Dimensions Consulting (14 Dec 2011)
2. Rupee could go to even 58 against the dollar: Sanju Verma (15 Dec 2011)...our special guest
3. Sharekhan sees 8-10% cut in market from current levels (15 Dec 2011)
4. No reason to be bullish on Indian mkt in 2012: Dalton Cap (16 Dec 2011)
5. Last leg of losses, mkt to see sunshine soon: Sanjay Dutt (19 Dec 2011)...RIGHT SIR
6. Sensex seen in 14500-16500 range for one year: Emkay Global (19 Dec 2011)
7. Nifty may slip to 4350-4400, pullbacks won't last: JM Fin (20 Dec 2011)
8. Don't be bullish, mkt may face more pressure: Fortune Fin (20 Dec 2011)
9. India story is weakening, stay in cash: Baliga (21 Dec 2011)
10. 500-point rally upwards nearly impossible now: Manghnani (23 Dec 2011)
11.  Market may test new lows over next one-year: Emkay Global (22 Dec 2011)
12. Mkt trend looks down, Nifty may retest 4500: Rahul Mohindar (22 Dec 2011)
13. Mkt may top at 4900, but is a bottomless pit now: MF Global (22 Dec 2011)
14. Market may test new low in 2012: Sangeeta Purushottam (23 Dec 2011)
15. See Nifty closer to 4400 in January: Ambareesh Baliga (27 Dec 2011)
16. See new low before fresh high; support at 4300: Anu Jain (27 Dec 2011
17. Nifty to hit new bottom in Jan, will stay bearish: HDFC Sec (29 Dec 2011)
18. Current bear market to continue into H1 of 2012: Sukhani (30 Dec 2011)
19. See a tough 2012, Nifty may hit 4000: Prabhudas Lilladher (30 Dec 2011)

JAN 2012 WAS THE BEST JAN SINCE 1994 WITH MARKET RISING 12.4%

At the end of Jan 2012, Nifty was @ 5200 (up 12.4% for the month). Nifty peaked on February 21, 2012 @ 5607. 5600 level was then breached six months down the line in September 2012. Lets go through expert views during Feb 2012.

Expert Views on week prior to Feb 2012 Top (Remember Market Topped @ 5607)

1. Mkt in bull phase, Nifty can retest 6300 in a yr: IL&FS (14 Feb 2012)
2. In Feb, Nifty has one-way ticket to 6000: Ambit Capital (15 Feb 2012)
3. 6350 within reach on Nifty, but gains to be slow: Sukhani (16 Feb 2012)
4. Don't rule out new high in equities this year: Atul Suri (16 Feb 2012)
5. Rally to continue, market may see new high: Punita Sinha (21 Feb 2012)

Current Scenario

Nifty rose 8.5% in Sep 2012 closing @ 5700....lets review experts opinion during 1st half of October 2012

1. Market looks strong; Nifty may see 5850: Aditya Birla Money (4 oct 2012)
2. Nifty headed towards 6300; bet on ICICI Bk, Dabur: Darashaw (4 oct 2012)
3. Nifty to see 6,000 plus levels by Diwali: Ambareesh Baliga (5 oct 2012)
4. Nifty may see 6000-6100 in Nov series: Angel Broking (16 oct 2012)
5. Dimensions Consulting sees Nifty at 6000 by December (8 oct 2012)

Market was flat in oct, while November it rose 5% (with all gains coming in last 2-3 days leading to expiry) flat in December. While, since June 2012 low market has risen close to 25%.

Current Views (since last week of December 2012)

1. See Santa Claus rally in January this time: PN Vijay (21 Dec 2012)
2. See mkt at 6100-6300 by Feb, if US fixes fiscal cliff:IL&FS (21 Dec 2012)
3. Nirmal Bang bets on Jan-Feb 2013; says India may be best EM (24 Dec 2012)
4. Sanju Verma sees Sensex at 22K by Mar 2013, suggests bets (24 Dec 2012)
5. Nifty may touch previous high in 2013: Citrus Advisors (26 Dec 2012)
6. Mkt to see good upside in January first half: Angel Broking (27 Dec 2012)
7. See upmove in January; Nifty may test 6150: Anil Manghnani (28 Dec 2012)
8. SP Tulsian sees Nifty near 6100 by mid-Jan (29 Dec 2012)
9. Religare Cap sees 15% upmove; no change in macros just yet (31 Dec 2012)
10. US, Europe sideshows; domestic boom to rule 2013: PN Vijay (1 Jan 2013)....US EUROPE SIDESHOWS...WOW
11. See Nifty at 7500 if 6300 breached decisively: Darashaw (1 Jan 2013)
12. Expect Nifty to scale 6100-6150 in January: SP Tulsain (2 Jan 2013)
13. Manghnani sees Nifty major target at 6180 (2 Jan 2013)
14. F&O: Nifty to test 6150 in Jan series, says ICICI Direct (2 Jan 2013)
15. Budget 2013: Consensus positive on 2013; no reckless buying: Kela (2 Jan 2013)....ABSOLUTELY RIGHT ABOUT CONSENSUS

BIG BULLISH CONSENSUS.....Let see what JAN-FEB 2013 has in store....

Nifty Rally on Weak Foundation !!!

Analyzing November 2010 and February 2012 Peaks with recent high

Peaking points for Nifty Stocks

1) Out of 50 stocks in Nifty, 16 stocks have made recent highs. 25 stocks are yet to cross their 2007-08 peaks, while 9 stocks (most of them banks) made their peaks in November 2010. 

2) The idea of putting this table is to further show quality of stocks leading November 2010 peak and February 2012 peak. 

3) Both Peaks were followed by correction of 10%+ over following 2-3 months. Nifty is yet to conquer November 2010 peak, while Feb 2012 peak was conquered after period of 6 months (Sep 2012)

November 2010 Peak (Nifty peaks on 5th November @ 6312)

Prior to November peak, September 2010 had big move of 11.6%, hence month considered is September 2012. 

Top 10 Gainers on Nifty (Sep 2010)

1) DLF, Tata Steel, Siemens, Hindalco (top 4 gainers) were massively down from 2007-08 peaks and were leaders for Nifty high. These stocks are yet to cross their 2007-08 peaks. 

2) Strength in Banking stocks like SBIN, HDFC, HDFCB and Axis Bank was impressive because they cross their 2007-08 peak. However they subsequently fell sharply and are now below their 2010 peaks. 

3) Only 2 stocks Ultratech and HUL were among the stocks which are part of current highs in Nifty. 

Top 10 Gainers on Nifty (one week prior to Top)

February 2012 Peak (Nifty Peaks on 21st Feb 2012 @ 5607)

Nifty witness very sharp rise from December 2011 low  4544 to Feb 2012 High of 5607. However the quality of this very sharp rise was not very comforting, eventually resulting in Nifty fall to 4850 by 4th June 2012.  

Top 10 Gainers on Nifty (Jan-Feb 2012)

1) Again, same story quality of move was suspect because same old stocks (which were much below 2007-08 peaks and below 2010 peak) were leading the rally. 

2) None of the stocks from these gainers have made recent highs except Maruti and Tata Motors. Barring these 2, all sotcks are yet to cross 2010 highs. 

Recent Nifty Move

Nifty has hit 2 year high of 5950 on 1 Jan 2013. Lets analyze what has led the current up move. 

Top 10 Gainers on Nifty (Past 30 days)

1) Out of recent top gainers, only 3 stocks - Bajaj Auto, Tata Motors and BOB have surpassed their Feb 2012 peak, while Nifty is comfortably above Feb 2012 peak. SBI is very close to Feb 2012 peak, while rest of the recent gainers on Nifty are significantly below their Feb 2012 peak. 

Nifty Top Gainers on 1-1-2013 (when it makes 2 year high)

The above table doesn't require much of comment. Only caveat is FII participation was low today. 

Conclusion

1) Quality of stocks leading Nifty highs were suspect during previous peaks (November 2010 and February 2012) as they are now. 

2) Both previous peaks were accompanied by frenzied move in small cap stocks as it is now. 

3) Nifty Premium has reached extreme levels. Current month Premium close to 1%, while next month @ 1.6% (close to 100 Nifty points). Not sure how to read this but it is highest ever I have seen. 

4) Typically, when market is very compressed and ranged between certain widely watched levels, first breach is invariably false. That move is normally to get people sucked in. Every pundit has been watching 5800-5950 level to take positional trade. Nifty has closed @5950 today. If the move is false then it should reverse very soon. 

5) VIX has been very compressed since June 2012 and is now it 13.7 (very close to all time low close of 13.05 on 22 october 2012). Protection is extremely cheap. 

6) Not sure about correlation but Nifty is within 5% of all time high, while rupee is within 3% of all time low.