Reminiscences GA

Reminiscences of A Technical Analyst
Around Dalal Street

By Dr. C. K. Narayan
PREFACE
Reminiscing about your experiences is the prerogative of the gen-Past and in that respect this book has
been fun to write. It carried me down memory lanes, made me examine some of my own silly ideas and
the various blind alleys that I ran down in the past in search of the El Dorado of the markets! It was fun
doing so, recalling the various characters who populated your life for good or bad, the lessons you learnt
along the way, whether or not you applied them. But more than the nostalgia, it is the opportunity to
cull them together and present them in a format that I hope will be of interest to the reader and more
so, of help to some budding technical analysts and market traders. The desire of every one who has
been down the road is to see that the others who follow on that trail dont make the same mistakes. My
goal is no different. I have written this trip down the years mainly to serve as a small historical record of
TA in Indian markets and to point out some pitfalls along the way that youngsters may want to avoid.
I thank ATMA for triggering the process that helped create this book and present some thoughts and
experiences to the technical analysts and other market participants. I trust they will enjoy reading it as
much as I did writing it.
www.growthavenues.com
INDEX
Chapter 1: The Long Road To Technical Analysis
Chapter 2: The Learning Years
15
Chapter 3: Core Competence- and why it is important
24
Chapter 4: Trading Markets at last! The great leap forward for technical analysis.
27
Chapter 5: The Institutional years- the value of developing perspective
33
Chapter 6: TA as a business
36
Chapter 7: The view from the 37th Floor Looking back, looking forward
39
Chapter 1: The long road to technical analysis

It was just another day back in 1977. I was back from my college and was chilling at home, listening to
some nice Classic Rock (my favorite genre of music) when my brother returned from office. He called
out to me and said he wanted to discuss something with me. As happens to any youngster at that time, I
quickly went over all my recent events, thinking, Was there something wrong that I had done? I really
couldnt think of anything that should have got me into trouble so I told myself this must be something
routine.
When I went to the other room to see my brother, he had lots of papers in front of him and was
arranging them in some order. He used to handle the money related stuff after my father died in 1972.
Not that there was any substantial corpus to manage, for, my father died within three months of
retirement as a Central Govt employee and the collective corpus of retirement and death benefits didnt
amount to much. I was about 19 at that time and my brother was 27. He worked in a bank so I suppose
he got automatically selected for handling the money stuff. I was too engrossed in being a teenage
college kid anyway and never really bothered about money and all. I used to be a bit enterprising during
my college days and had found ways and means to ensure that I earned some extra pocket money, by
some means or the other. I had this independent streak to make money even when I was a kid. I recall a
time back when I was in my fifth standard or so, when I found some items that I could trade in and make
a small bit of money. So it appears, that somehow I was destined to end up in the markets!! Trading,
was somehow inherent within me right from younger days!
Be that as it may, here I was, facing my brother and
his papers and he had this serious look on his face.
What now, I thought to myself? It proved to be a lot
more than what I had anticipated. I want you to
start looking after these things now, said my
brother, gesturing at the papers in front of him. I
have been transferred to Porbandar and I will not
be around to take care of it and someone has to.
Our elder brother doesnt have the time. But you
are in college and you will have a lot of time.
I began to protest. But I am in Dentistry, I said,
and this is all finance. I know nothing about it. The
protest didnt work. Look, we have no choice.
Someone has got to take care of it and right now you are the only one. So stop whining and start
listening. Well, that was that. Thus began my indoctrination into stock markets. From someone who
had very little idea of what it was and just had some vague idea of what to do. It was really my brother
in law who was the stock market man. It is thanks to him that my journey into the markets really began.
Encountering Stocks
You see, when my father died, we got some funds. We were three brothers and I was the youngest. No
one had a clue about anything in the world as my two brothers had just finished their graduations and
were recently employed. And here we were, suddenly, hit with a personal tragedy of sudden demise of
our parents and not knowing anything about how to survive this world. Thankfully, my brother in law
(elder to all of us) was a man of means and also had firm head on square shoulders. He took charge of
the money that was received upon my fathers demise and after putting something aside in FDs, he then
told us that he was going to put the rest of the money into stocks. For someone to do this in 1975, with
small proceeds and three young kids out on their own, it was either a crazy idea or something
particularly wise. I would like to think of it as the latter. Mind you, I am talking 1975 when equity wasnt
even a known thing! But my brother-in-law was a smart guy and apparently knew his onions. The money
was invested into Hindustan Lever, Bata, ITC, SPIC and Great Eastern Shipping. If I recall correctly, we
had approximately 100-200 shares in each of these. Before you think that it would have been a tidy
amount, let me clue you into the real picture. All of these stocks were priced around Rs.16-17 and only
Bata was about Rs.30. So you can now get an idea of my princely start into stock market investing. The
entire corpus was about Rs.15000-20000. This is like a one-time dinner bill today in a fancy restaurant
but I am talking here about a lifes savings of a man who worked his entire life and retired from service.
And it was papers relating to these investments and some FD receipts etc. that my brother was alluding
to. I was apprehensive, but one of my qualities has been to
always quickly accept whatever is there in front of me. This
has been one of my greatest strengths in the market,
something that I would find out much, much later. But at that
time, I simply resigned myself to this mundane chore and sat
down to hear my brother tell me what is what. He took me
thru the differences between shares and FDs and though both
were certificates, I could understand the differences. I was
happy, finally, when he said, All you have to ensure is that if
any dividend cheque is received from the company, make sure that it goes into our account. If any other
letter comes, then let me know about it. That sounded simple enough. I could do that without really
messing up my current life, I thought to myself, and immediately nodded my assent. And that, my
friends, is the rather tepid start to my career in the stock markets!
I have always been a diligent sort of fellow even when young and am a bit finicky when it comes to
keeping records. I am mentioning these in particular because these are qualities that I believe stood in
me in good stead when I gave a more serious tilt to my market interests later. So I started off by making
a list of the stocks, their names, current prices and approximate times when the dividend cheque could
be expected. After that it was a cinch to do the job. And so this went on for a few months.
After about a year or so, I started paying a little more attention to the stocks we were holding- mainly
because they were not moving at all! To me that seemed like a waste of money! The dividend cheques
were small (in those days there was actually an embargo on the amount of dividends that a company
could declare) and hence unexciting to a 19 year old! So I started looking around at other stocks and
what they were doing. This was the first move towards learning about my future environment.
The first money flush
Around 1977, the public issue market started picking up after the govt passed the FERA dilution act a
couple of years before that. This was one of the greatest bonanzas for the investors. It was almost like
handing out money at Flora Fountain! Here were the best of the foreign companies that were forced by
the act to dilute their holding to 40% shareholding and this created one of the most fantastic
opportunities to make money for Indian investors who understood the opportunity, as most of these
stock sales happened below intrinsic values! But the companies chose to do this happily because now
these companies were able to operate expand and diversify in any industry open to the other local
firms! Thus for most foreign companies, FERA dilution provided an opportunity to become Indian and
to expand. It thus became a win-win situation for the companies and for investors. With our permanent
colonial hangover (it is still not gone, I sometimes think!) Indian investors were more than happy to own
foreign owned companies and quickly bid those stocks up when they were listed.
My greatest excitement occurred when I applied for Colgate Palmolives IPO and was allotted 50 shares.
The shares were issued at Rs 25 and were listed at Rs 100- something unheard of during those days!
Colgate actually created a history of sorts at that time with the listing and I dont think there was any
company that listed at such a wide multiple from the issue price! For me, it was a heady experience
because this was, like, my first big foray into the markets and what a resounding success! Compared to
what was happening in the stocks we held in the portfolio, this was a humdinger. Hindustan Lever and
ITC looked like dumb widows in front of this nubile maiden called Colgate! And, my career as a stock
market enthusiast was launched with Colgate!
Some younger readers may find it interesting to know that Thums Up which survives to this day really
came about because of this FERA act! During the 1970s, Coca Cola was one of the companies that chose
to leave India rather than comply with what it felt was the restrictive announcements of the govt. In
1977, George Fernandes of the Janata Party became the Industries Minister and being formerly a
militant trade unionist, his policy framing was seen as most unfriendly by foreign owned companies.
Among those that chose to leave India at that time were IBM and Coca Cola. While the former did not
really impact the common man, the shutting of operations of the latter certainly did, because Coke and
Fanta etc were the favorites among all the people (Pepsi was not in India at that time, so Coke pretty
much ruled). Their departure left a big hole which the govt sought to fill by introducing their own cola
drink, aptly titled 77, standing for the eponymous year when the Congress was tumbled from power for
the first time since Independence! However, the market place would simply not accept a govt made
fashion drink like a cola (for, that was what it really was!) and this gave the Chouhans of Parle the
golden opportunity to launch Thums Up. Until then, they were well known for Gold Spot, an orange drink
but seeing the vacant space in the cola market, Parle seized the advantage with a quick move. The rest,
as they say, is all history!
And there was no holding me back. At around that time, a few of us, friends who were all interested in
the stock markets, got introduced to a sharp bank manager, who somehow found a way to fund our IPO
applications. To this day I do not know whether what he did was legit or not, but we did not really ask!
This funding today is very much the norm but I am talking 1978 here when there were restrictions on
just about everything!! We could make multiple applications in the public issue and the bank would be
the second applicant and the entire funding would be from the bank. We paid interest on the number of
days the funds were used (just like today) but since the entire process would take, like, a month or more
for the process to be completed, we did end up paying some decent interest. Maybe thats why the
bank management (it was a cooperative bank) did not ask too many questions. As soon as the stock
would list we would dump it on the first day and encash our profits.
This was such a well-oiled operation that there really was never a need to be doing any other thing such
as analysis or estimate prospects of the stock for the future etc! All we were doing was applying in
public issues of Fera related companies and raking it in. Castrol, Ciba Geigy, Ponds, Burroughs Wellcome,
Ingersoll Rand, Dorr-Oliver etc etc, name after name, they just kept coming and it was one of the best
times of my life as a 20 year old making very good money with almost no effort. The money was also put
up by someone else (the cooperative bank) and all we had to was find the names to fill in as the first
applicant. I suddenly was most friendly to distant cousins and other acquaintances (who were, mostly,
strangers to the markets) and since I had a slightly persuasive nature and reams and reams of
enthusiasm, they all (mostly) agreed to lend their names. Only a few of them asked for some share of
the spoils which suited me just fine!
Of course nothing lasts forever and soon the flood of
issues ran out and the bank then withdrew the funding
when they ran into a few bum deals. That was the end
of the good times! Now that I was bitten by the bug of
the market, I needed to be part of it and get some
action.
So one fine day I just decided to go to the market. Off I
went to Dalal Street, to the stock market, as it were
and was disappointed to find a building that was in the
process of being demolished. The new imposing stock
exchange tower was already coming up (it began
construction in 1970) and the wing facing Dalal Street was already pretty much complete. I entered Dalal
Street and was caught by surprise at the roar that was in the air. It was quite, quite loud, like being next
a school during recess time! Only, this recess lasted two full hours! But the roar itself created even
more excitement in me. For, it was a sign of life, throbbing, pulsating, and reverberating every second!
For someone who came looking for action, boy, did I find it! At that point of time, I did not have the
courage to go inside the building and take a closer look. But there was this gap between the old building
and the new one and you could see thru that gap as brokers and subbrokers went whizzing past with
some book in their hand and faces full of concentration and expressions. Energised, I went back home
with a conviction that this was the place for me.
But here I was, soon to become a Doctor, completing my course in Dentistry. I was always a good
student in my school and college and it was no different with Dentistry. I actually became a University
Rank Holder and cleared my subjects rather effortlessly. Studying came easy to me as it was part of my
natural set up I suppose. I have always been a curious person by nature and wanted to know absolutely
everything about everything! I had an insatiable desire to read and even during my college days, I would
read up books that were outside the prescribed syllabus so that I would know the subject better. The
extra bits that I could add to my answers perhaps did the trick in ensuring that I was always near the top
end of the class all thru my academic career. But now a new desire was born within me. Bitten by the
easy money induced by public issue allotment and charged up by that one visit to Dalal Street, I was
already on my new path but didnt know it at that time. Like any good boy, I completed my career
course and thought about setting up practice as a Dentist. This is what boys from respectable families
did. And they get married and raise children who will then follow Papa as a dentist too, perhaps!
Death of a dental surgeon
As luck would have it, there was another chap in the Dental course whose friends father happened to
be working with a broker. And that is how I ended up visiting Dalal Street again. By now, the new BSE
tower was functional and the initial floors were occupied. The trading ring had shifted to the third floor
of the building and my first broker (PPJ Shroff) invited me to come during trading time. I cannot forget
the first time I went there. As I reached the entrance of the spanking new BSE tower, the roar of the ring
was already audible. The difference was that it was less of an assault since it had shifted three floors
higher from the ground! But I was already anticipating the roar and felt my excitement rise as I began to
hear it. Ascending the steps to the third floor, that excitement became only greater as I saw signs of
market activity with every step. People just hanging around, people talking to others (mostly in Gujarati)
about some stock or the other, people rushing about with different expressions, sub brokers conferring
with clients. I went all the way till the doorway to the Ring and stood outside it. Enthralled. The level of
activity was unbelievable. I could peek inside and see a
lot of people milling inside, shouting and gesticulating to
one another and writing on a small pad they carried in
their hands. At some places within the Ring I saw people
actually jostling. It wasnt a fight though- as it may have
appeared from the outside- but rather a process, I would
discover later, of ensuring that some specific sought
after stock was either bought or sold. I did not know it at
that time but the Ring composed of Jobbers or the
market makers and the Clerks or the subbrokers who
would execute the trades. I saw along a wall rows and
rows of telephones, hotlines from the ring to the
brokers office and these were manned by different set of people who seemed to be having this super
hearing ability because the din was so much that it was even difficult to hear yourself think! And scores
of these Clerks would come out of the Ring, confer with their clients, run right back in to execute the
order. Some in a hurry would just shout from near the door to a client waiting just outside and basically
add to the existing cacophony! But I loved it all! Mesmerized I just stood there, I think for the entire two
hours that the market was open! Doing nothing but just absorbing the atmosphere, sinking it within me
and knowing from every pore that this is what I want to do in my life! I think that is the day I died as a
Dentist (although I would continue to be in the profession for another five more years!) and was reborn
as a Market Man!
I started visiting the market often, just to get that fix of
the thrill of being there. Since the official language of
the market appeared to be Gujarati, I even started
learning Gujarati. Fortunately, it is an easy enough
language to learn and understand and I picked it up
quickly. I even began to read, with considerable difficulty
of course, Monday copies of Mumbai Samachar (only the
stock column) with the help of another friend. Just so
that I could keep myself abreast with what was
happening. The Gujaratis seem to be clued in and I could
not have it any other way. They also held sway in the
market and there was hardly anyone else from any other
community that you could find there. To this day,
whenever I speak numbers, it still comes out
automatically in Gujarati!! I think I picked that up from
the public address system in the BSE. During the trading
time, they had a wire service that would announce the
prices of leading stocks several times during the day. The
announcer would lead off with the name of the stock, state the price in numbers and repeat the same in
Gujarati. So hearing that over and over every day several times, the numbers in Gujarati kind of just sank
into my subconscious and remains there till this day! I recall it would always start with Century Textile
and followed by Tata Ordinary. In the early 90s, Century had been replaced by ACC as the first name,
owing perhaps to the sudden surge that we saw in its price in those years. I would wait every day for the
closing quotation that would be announced at 2.30pm. Then it would be time to gravitate towards the
second floor where two big blackboards were strung on the wall, with stock names on them. Stock
exchange officials would come along around 3 pm and start writing the official prices on the board one
by one in chalk. There were many who stood around the board writing down the prices in their
notebooks. Very soon I started doing the same. Although we got these prices in the papers the next day,
the thrill of having them (fresh!) lent it a different context, a different meaning perhaps! I dont know
why I did it. But I did it anyway because it seemed like the thing to do! Besides, it made me happy.
Anything moving me along the pathway of building a stock market career made me happy.
Enter Dhansukhbhai
It was now well into 1979 and it was about this time- I was in my third year as a BDS student- that I ran
into one of the characters who would change the course of my life some more. A genial old man, who
came as a patient to me at the Govt Dental College, Mumbai. In the course of a light conversation with
him, I asked him what he did for a living. Imagine my surprise when he said that he was a stock
subbroker! And that is how I got into hardcore trading. You see, Dhansukhbhai was a subbrokerwith a
Dabba stock broker. At that time I had very limited idea of how trading occurred but inside of me I knew
that I really wanted to do it. So when he took me to the market I saw a very different piece of action
going on there. This was my second broker and all he had was a table space on the fourth floor (one
among the very many that were there on that floor) and people were milling around the table and
placing orders. The Dabba is a great system for a trader, although illegal. I didnt know it but I loved the
fact that you could just place the order and it would be filled right away!
Dabba trading is a practice where the broker himself acts as a kind of an exchange. He fills you for your
order whether its a buy or a sell. Meaning, he takes the other side of your trade. It is in practice to this
day and perhaps flourishing too as all settlements happen thru cash. This is a parallel trading system and
try as they might, the authorities have been unable to eradicate it. The advantage it offers to a trader is
that you get an instant fill at the price quoted for your entire quantity. In contrast (during those days),
you had to place the order and the broking clerk would go the Ring, and try to execute it. Sometimes it
would get filled and sometime it wouldnt. But he has many more orders to execute so he would finish
one round of execution and return to you after some time. Till then you have no idea whether your trade
is filled or not. When trading fast and large, this doesnt work (not unless the broker is prepared to give
you a highly personalized service) and hence people preferred the Dabba where, buy or sell, you were
done in a flash. It also assisted trading because, being a mini exchange in itself, the people running the
show would give you continuous quotes. They did this by having a hotline into the ring where someone
would man it and the line would be open all the time. The man in the Ring would give continuously
updated prices thru the hotline and the Dabba runner would keep making the market in the main stocks
thru the trading day. This was a much more efficient system for hard core traders as they were with
the market all the time compared to those who went the normal route who had to wait to know,
sometimes only by late evening whether they were filled or not! More, since the system existed outside
the main market legal frame, the entire settlement happened in cash- which suited a lot of people just
fine.
I began visiting the 4th floor office often and began trading. Using what? Nothing. Just like most other
traders begin to trade even today. With nothing but expectations and hope and a (completely wrong)
belief that there is really nothing that needs to be known before one can begin trading! You stood there
and listened to others discussing some stock or the other. You pick out the one who seems to be
knowing what he is doing and just follow him. I had marked out one Pandya and one Lakhani who used
to trade big and always carried a smug expression on their faces. As far as many of us were concerned,
that smug expression meant that he knew something! And so, several others and I would simply repeat
trades being done by this Pandya or Lakhani. As a newbie trader, the concept of short selling was
unknown to me and this is one of the things that I learnt while at the Dabba outfit. I was thrilled beyond
words! Not only can you buy and sell (the only thing that I knew existed) but you could now also sell and
buy and still make a profit! Wow. I just doubled my possibilities here, I thought. There were Pandya and
Lakhani, sometimes buying sharp or some other time selling like crazy. While we never knew the actual
genesis behind the trades (they actually traded at two or three other brokers on the same floor, all of
them running Dabba), we just presumed they were what they appeared to be- fresh buys or fresh sells!
So we would follow in that wake, thinking that we are following a master trader. The truth, turned out
to be quite different. While Pandya and Lakhani et al were continuing to be smug and active, I found
myself bleeding. A little by little but the damn wound wouldnt clot and stop bleeding. I never knew if
they made money but I most certainly wasnt. It came to a point when I had to start selling a couple of
shares to fund my loss making activity.
I continued to invest into stocks that someone would recommend or the ones that I fancied for no
particular reason- just a gut feel- and some would make money while others didnt. Whatever money I
made was being frittered away in the desultory attempt to trade. My intellectual side would not permit
this kind of affairs to go on. That led me to Fundamental Analysis and its existence. And an encounter
with another gentleman who would change my life by yet another shade. His name was PK Marfatia and
at that time, he created a storm in the market by coming out with a publication that actually
recommended scrips for buying based on analysis! Something quite non normal for most of us. He
published a magazine called Investors World and when I read a copy (it used to sell at Rs 20 which was a
bloody fortune in those days! For comparison, you could get a vada-pav for about 0.50p). As soon as I
read this, I knew that this was the way to go. We have to analyse and reason with variables that affect
the performance of the company. A case for investment is what he would present the arguments
under and I found that approach very, very persuasive.
The road to fundamental analysis
Immediately, I decided to pursue fundamental analysis. Off I went to meet Marfatia, put together the
money to pay him to become a client and waited eagerly for the next issue of the Investor World. I
lapped it up. I began reading books on How to read balance sheets and How to analyse a stock
fundamentally (mainly from British Council). I went in search of local authors and found a couple- one
by Hemant Dani and another called Business Forecasting by GR Mansukhani. Strangely, these people
also followed something called Technical analysis but I didnt bother about it at that time, thinking that
my focus is on something else. In those days (perhaps it is still there now) there was a Shareholders
Association which had a library with balance sheets of many companies. This was situated in Bhupen
Chambers, right across from the BSE tower. After the market was over (it ran those days from 12 to 2
pm), I would go to the Shareholders Association library and start reading balance sheets (even though I
was just getting to the grips of how to). I also came across the BSE Directory that stored all information
of stocks by sector and that I thought was a treasure chest! Not only the company background but also
the figures- all in one place! Wow. I used to devour those
volumes one by one thru the next several months! I became a
regular in that place and there were other similar nuts like me
and so we became a kind of informal fundamental club that
talked about numbers and value. Since most of the others of
this informal club were CAs or Commerce graduates, I kept my
mouth shut and largely listened. That helped.
10
So, one fine day, I got this new issue of Investor World in which Marfatia had analysed the prospects of
Great Eastern Shipping and how it was now poised for heading higher. Under Case for Investment, he
presented arguments that seemed, to me, unimpeachable. Now here is where familiarity plays a role in
investing and trading. Since we had held GE Shipping from earlier, I was already familiar with the
company and hence perhaps more attuned to receive good news about it. In all the time that I had held
it, the stock never, never performed, remaining sticky around the Rs 18 levels for years! I got fed up and
sold it and was delighted when it sank to near 10 levels. I congratulated myself on a job well done.
Never looked at it again since then.Hence when this detailed analysis on GE Shipping came up, I was
more than surprise to know that the prices were now at 60! I felt cheated and like a fool at the same
time. I now needed to redeem my error of selling out something that had tripled! So I was a complete
believer of whatever was written.
Now that I had redeem myself, of course the situation became different. GE Shipping was no longer
just a stock. It was a symbol of my failure. Since I had sold it way back at 16 and now it was 60, I had so
much of losses to recover! This is the kind of mindset that develops when one is not educated properly
in the ways of the market. I did not realize back then I was making the classic error of substituting my
psychoses on to the stock and expecting it to clean me up. This is what traders do all the time. The
reasons why they trade something the way they do is almost completely divorced from the reality of
trading. Unfortunately, it is a lesson that many of us learn thru many years of trading. There is no
training imparted in this area as it is so abstract that people dont even feel that it exists! How can you
then expect to know or learn about something that you dont even know exists??
GE Shipping was in the budla list and that gave me an opportunity at redemption. I could now trade a
substantially larger quantity so that I could quickly recoup the losses that I had made by selling it early.
(It did not matter to me that the two events were apart by about 12 months or more!). So I went and
bought myself 3000 shares at a price of 64. According to the Investor World, the target price was 120
and I firmly believed it and was already tasting the success in my mouth! To make me even more
convinced, the stock moved to 71. I came to know, for the first time in my life, about things like Baltic
Freight Index and Bulk Carriers and OBO vessels. I read up on Shipping industry quickly and the more I
read the more convinced I was that 120 for GEShipping was a shoo-in.
The prices continued to improve a bit more, reaching 74 and I was on a high. And then it stopped. And
turned around. Very quickly it hit 67. No problem, I told everyone, the BFI is up and Great Eastern ruled
the seas! The market didnt buy my talk. Of course it wouldnt but did I know better? No way! I thought
that if I spoke convincingly enough (at least to myself!) then eventually this thing should go where it is
supposed to go! But GES continued to drift and was soon at 60. Now,
the 3000 share position (which was a lot for a still-in-college kid of
21 to hold) began to hurt. Chimanbhai, my broker, suddenly started
to speak to me a lot more and all the time it was about clearing the
debit. Until now, I rarely faced the situation where the broker had to
ask me for money, for most of my trades were small and under
control. I tried to reassure him that the stock would go up, even
showed him a copy of the Investor World with the analysis. But he
was polite and said, I dont follow all these things. It is for educated people like you. Please pay the
difference and you can continue to hold for your expected target. I paid out whatever money I had and
that saved the day. Just.
11
Prices continued to drop and soon reached 50. I was now bleeding profusely and Chimanbhai had, by
now, become the Devil incarnate! Every time I thought of him the vision was only of him asking me for
more money! I cursed him and held him responsible (probably) for the current price of GEShip. Dont
you know this is going to go up, you Dolt! Stop bothering me for this money, I wanted to scream at him.
But of course nothing would do. So I began selling my stock. Hindustan Lever was the first to go. I
remember selling it at around 32. I reasoned that this stock was never moving anywhere and just
churned between 30 and 34 forever. And in any case we were selling it at a profit- after having bought
at 18. And it was for a good cause- I was holding the super stock, after all. The one that is going to go to
120! This is how we end up reasoning all our losers. The unwillingness to let go of a loser is one of the
biggest reasons for trader wipeout. And that is exactly what happened to me.
The stock continued dropping and hit 42. My spirits hit somewhere around minus 420! I could not sit nor
stand nor sleep nor eat. Stock after stock that we owned was being sold to hold on to this dud- all in the
hope of revival and redemption! Not being able to bear it anymore I went back to Marfatia and told him
about my status. He sat with me, going over the stats of GEShip, concluding finally by saying that I
should probably get my price back. Mind, no more talk of 120, but who cared? He had said the magic
words- that it would come back to my price and that is all that I wanted now. Profits be damned! So,
enthused, I went back to the markets and to buoy me up a bit, the Co announced a bonus issue at 2:3.
So now I would get 2000 shares more on my original holding of 3000 shares! This should send the prices
higher, I thought. But little did I know that the market already had wind of this and welcomed the news
by pushing the prices down to 36!! I now didnt even have the heart to go back to Marfatia!
To cut this story short now, the stock went ex bonus and continued dropping, hitting slightly below 10
levels by the end of the year. I could not bear the pain any more and I bailed out at 9.75! It was the
biggest loss of my career until then, one that I could not take financially or mentally. All the stocks that
we held were sold to finance this and finally we were left with nothing!
12
While this trade inflicted the greatest amount of pain in my entire trading life, it also taught me the
most important lesson of them all. That I should not rely on anyone so much that I abandon my ability to
act altogether. I am sure when Investor World put out the first call they would have analysed the
prospects accurately. But I cannot forgive the second chance that I gave the man when, knowing the
situation, he held out a hope of redemption just because he did not want to admit to being wrong. The
stock never looked up for the next many years! All thru the pendency of the trade I found myself
powerless to act, getting progressively reduced to an increasingly helpless state, frustrating myself in the
process and hating myself for it.
My faith in fundamental analysis eroded, because the practitioner was faulty. That was probably a
wrong conclusion. The subject itself has nothing to do with the practitioner or his short comings. But an
aggrieved mind demands retribution and not reasons. So the subject got blamed and I was turned off it.
But I realized that I needed to know what to do and for that I had to learn- about markets, about
methods, about risk containment, about analysis, about everything. Thus, my learning phase was about
to begin. It would last the next several years. And it would take me to where I eventually ended up- into
Technical Analysis.
13
The unofficial Options Market on the Street

One of the menaces in those days was Kerb Trading, which the exchanges tried their best to banish but
never really succeeded. Since trading time was short (12-2 pm only), it seldom sated the appetite of the
active trader. So, they found a way of continuing their trades on the street. Next to Dalal Street was
Hamam Street and that was the site of kerb trading. Outside the Lalit Restaurant was the official kerb
exchange! It was a well- structured enterprise, with its own set of brokers who would stand for the trade
and ensure its performance. In those days, your word was the key and people honored that, whether in
profit or in loss. All trades would be entered into the official books on the following day.
Much before the options markets commenced in 2002, we had a kerb version of this market called jhotaphatak or teji-mandi. This market was created and run by a single man, a tall, imposing bespectacled
oldish gentleman by name BabuPhatak. He would make the market and everyone traded with him. He
gave you bids and offers for calls, puts and straddles. All of these were for just the next day (so one day
option contracts) and the settlement price would be announced at 1.45 pm by a designated broker.
BabuPhatak would wait outside the trading ring and this designated broker (an old timer) would go
around the ring, every day exactly at 1.45 and state what the expiration price was. Of course the list was
limited to a very few stocks like ACC, Tisco and sometimes Reliance. On special days like Diwali muhurat
or budget day etc. special rates would be quoted in advance! It was a fantastic system that ran smoothly
and I dont recall a single instance when some default occurred on this. I myself played this market
almost on a daily basis. It used to be a nice way to earn some extra cash when you were short the
options and being a one day contract limited your risk pretty much. Of course the premiums were small
too. It went into a bit of a decline when the then BSE chief MR Mayya banned BabuPhatak from entering
the building!! Only such draconian measures could bring it to a slowdown. It was fun while it lasted,
though!
14
Chapter 2: The Learning Years

As I wrote earlier, I was seized with knowing and once I focus on a subject, it becomes a bit of an
obsession. Thus, conquering the market became my single focus in early 1980. Those days we had
nothing by way of reading material available locally. So I wrote to a couple of my friends in the US,
hoping that they could find me something. A couple of them answered and soon thereafter two books
landed up at my desk, courtesy some cousin who had travelled back from the US. The first was Ways of
Wall Street, a general account of how business was done in the US markets. Informative but no great
learning. The second book caught my attention almost immediately. Entitled The Art of Low Risk
Investing, the book was all about using Moving Averages. This book was my introduction to a subject
within technical analysis but somehow that book never said so.
My mind must have been primed for this sort of thing because I took to the
method instantly. It explained in simple terms the use of 5/15/25 period
moving averages and lay down some simple rules of how to buy and sell
stocks based on crossover rules. At the end of the books first reading, I
knew instantly one thing- that I would no longer be a helpless bystander.
Here was an approach that allowed me to control my action or at least be
in the know of what needs to be done. Whether I do it or not is entirely
another question. This was a far cry from the GE Shipping days when I had
no clue as to what to do- except stand there and hope. I did not need any
further prodding. I particularly liked a passage in the book where he
describes the descent of US Steel, a top heavyweight of the markets during its time, and stated that
even the directors of the Co were able to exit the stock only around $12 while his method helped to
capture the sell signal somewhere around $45!! This was music to my ears and a tonic to my brain.
I immediately rigged up a book with the columns for writing down prices and calculating the averages. I
then began a process of noting down prices of many stocks, picking the names in a completely random
fashion. At that time I really had no idea of what was a good stock and which was not. I probably went
by whether I liked the sound of the name- Anil Steel? Naah, too tame. Armada Metal? Wow, zingy! Lets
pick that one. Never mind the fact that the latter was probably some small time fly-by-night affair!
The list by itself did not really matter. What happened from that exercise is the more important
outcome. As I regularly wrote the prices of the stocks, I began to notice that there was some moves of
the stock within the day. It began at a certain price (open) and then went up and then down ( I believed
that was the sequence- how quaint!) and finally came back up to finish the day at a different level
(close). This triggered in me thoughts of how I could perhaps catch the stock near the low and then ride
it to the high, all within the day! This would be the solution to all my problems, wouldnt it? I wonder if
there are people thinking that way today too! Writing the prices I also began to get a feel of when they
started to move, something that created in my mind a sense of price movement. For the moving
average method I used the closing price only. I would port that diligently from the price book into the
MA book and update the calculations in that one every day.
The method itself was pretty straight forward and it helped instill into me a sense of discipline in
following a certain approach. I admit to getting quite bored of that approach quite quickly. It was
unexciting and oftentimes pretty boring work. While I enjoyed updating the prices in my book, the chore
of converting many of those into the three moving average periods and then check on which ones were
15
flashing signals became tedious and like any newbie analyst, I wanted to move on to something more
interesting, more exciting perhaps.
I used to frequent a shop near Metro cinema called the New and
Secondhand book shop, and the owner there was a kindly
gentleman who always allowed me the luxury of just browsing thru
the literally thousands of books that lay stacked in that small narrow
shop. But my interest in reading was so varied and that shop was
such a treasure trove of books and available cheap!- that I would
many times spend entire day there just browsing thru rows and
rows of books, leafing thru them and buying them by the dozens.
Writing about this eponymous store in a blog Book Caf, the author
Aakanksha Singh, writes,
The best aspect of this bookstore, apart from its huge collection, is
the atmosphere. There is a lingering smell of dusty books that
pervades the shop. As you browse through the long, endless shelves
and come across books in beautiful bindings, hardbound, leather
bound, you get the feeling that you are transported back in time, wandering in a lost library that has
some how managed to salvage its books in a pretty good condition. The seclusion of these shelves allows
you to feel that you are about to explore or discover a new book. And trust me, you are bound to stumble
upon some rare book or an old one at least if you look diligently. This feeling of seclusion and exploration
is heightened on the first floor where it is rather dark but not dingy. Here there are some
research/encyclopedia type books. Not many people come up here and you are mostly alone browsing
these shelves.
I wholly second those sentiments. In and thru these browsing
sessions, one day I came upon some course material (probably) of
Bajaj Institute of Management that spoke about stock analysis. I rifled
thru it with some interest and towards the back section of the book,
there was an entire chapter devoted to what was called Technical
Analysis. This was my first brush with the subject. Recall that I was
already getting into that groove, even without realizing it, thru the
process of writing down the prices. Thus, the chapter on charts struck
an immediate chord in my mind. I realized that I was already kind of
constructing charts of price movements in my mind as I was writing
down the prices! After a long time I felt energized and I quickly went
and got myself some chart paper and began to work on my first chart.
The year was 1980. I remember my first hand drawn chart was on a
stock called Atlas Copco.
I wish I could magically produce that chart here as an exhibit! Do authors who write autobiographies
really preserve their old photographs? Do they already know when they are young that they would one
day write a book? Hell, I dont even have a photograph of my parents, leave alone any of mine as a
youngster! This idea of writing my Reminiscences came after much prodding and though this would be
more interesting if it was illustrated, how the devil does one go back to get such photos?
The Doyen of TA- G R Mansukhani.
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And so began the quest for TA knowledge. Problem was that there simply was none available! I suddenly
remembered then about the book that I had earlier bought by author G R Mansukhani. I recalled that
even though his book that I had bought (Business Forecasting) was more about economic trends and I
had read it from a fundamental analysis perspective, he did allude a lot to charts. So off I went to meet
him. And what a meeting it was! Mansukhani, can be truly said to be the doyen of technical analysis in
India. He was the pioneer and was drawing charts and commenting on them and writing about
companies using TA as an approach way back at a time when (no one in my recollection at least) the
subject was relatively unknown.
My meeting with Mansukhani created a strong impression on me. He was already well into his 60s by
then and he spoke to me at length about the subject and how it could help me. He directed me to his
book Golden Investment Strategy that had the basics of the subject covered with some simple
methods for trading and investing. Back in those days, the concepts of candlesticks and oscillators etc
were yet unknown or undeveloped and hence the book was more about traditional technical analysis
(patterns, trends, moving averages etc). I thanked him, bought his book, subscribed to his newsletter
and came away a convert. I think I still have the file of his newsletters back from those years. For
students of history, it makes interesting reading. The way he would analyze using technical parameters
and then link it all up to what was happening in the economy and the markets in general created in me
the holistic picture of technical analysis. I think that presentation stayed with me throughout and my
current analysis as well as writing style would be akin to the way he presented it. I am indebted to him
for imbuing in me a sense of the big picture even when you are looking at smaller time frames as well as
the importance of linking technical pictures with current market action and surrounding sentiment.
I used to write for a publication called Intelligent Investor and once while discussing with the Editor
RajshekharIyer, one of the sharpest minds in the fundamental analysis who is also extremely open to
technical analysis, we considered the possibility of doing interviews of veterans from the field of TA.
Rajshekhar knew of Mansukhani and we agreed that we would set off the series with an interview of his
and I called him up to fix up the time. This was in the late 90s and by then he had already retired from
active business but still kept himself abreast of the markets on a personal basis and even offered training
to interested people! I met him at his residence and he was sharp and with the times as he was back in
1980 when I met him first. His answers were crisp and to the point and it was such a joy to do that
interview! It remains one of the high points in my life. Interacting with knowledgeable people is always a
fulfilling endeavor. I wish I had those tapes to listen to or can read that manuscript of the interview
again. But alas, Intelligent Investor was taken over some years after this and I dont know if those
records will ever be available.
I had, by 1981, set up my own clinic and had begun practicing Dentistry. My search for TA knowledge
continued in the scanty world of Indian publications. The bible says Seek and ye shall find and that is
something I found to be true in my case. My search for material on TA was so intense that it began to
turn up in the most unlikely of places. A patient of mine turned out to know a cousin of his who
apparently had a book that he used to read and rave about. I hounded this patient almost every day to
get me that book and soon, I found myself in possession of a copy of the TA bible, Edwards and Magees
Technical analysis of stock trends. This seminal work opened my eyes further, to the world of trends and
patterns and how they impact the way that stock prices move. My charts suddenly lit up as my mind was
now able to help my eyes truly see the chart! And I saw patterns everywhere! There is a head and
shoulder, here is a triangle, that is a wedge! Modern day TAs who may be more familiar with all these
elements may find my excitement amusing but for me, in early 1981, it was like finding a mirage in a
desert! Imagine a young enthusiast trying to find some one or some thing to help him along the way and
17
there is nothing around? Kind of reminds of that scene in Titanic, when the few who got on to the
lifeboats shouted Help in the middle of a vast ocean! With no one around it was a cry of desperation.
How do you think those people would have felt if their cry was suddenly answered by a passing ship?
What bounds their relief and joy? For me, it was not dissimilar to that situation.
The first big forecast- 1981
I was now on the road- with a copy of Magee, Zoharchak (Moving average book) and Mansukhani giving
me company and my hand drawn charts and data entry book! I was unstoppable and bursting with ideas
about stock moves. The market in 1981 was already part of a small bull phase. This was on since the
lows of 1975 and as I plotted the chart, I found that the market was probably headed into a culmination.
Though I cannot show you the original chart, I have reproduced here a print of what I was looking at
back then.
My first big forecast using charts

The 1981 high for the market!
The index was about to hit a perfectly channeled move and after doing so, it broke the internal channel
as well. The bull market was about 5 years old, having commenced from the lows after the disastrous
Dividend Control act of 1974 saw the market plunge over 20% in a day and then continue to halve across
the next 12 months. Economic conditions, though better, were still quite irregular. Though the
academic papers would put the start of the economic reforms from somewhere around early 1980, the
implementation of the policies was too politicized and varied from year to year. The conditions were
ripe for a market correction and I gave out such a call to all those who were known to me.
18
At that time, forecasting on the Index was almost completely an unknown and the only person doing
this to some degree was GR Mansukhani thru his newsletters. I wrote Mansukhani with my forecast and
he was kind enough to reply, stating that I am on the right track and to persist with this line of analysis. I
could not have felt prouder than I did on that day! It was not until late 1984 that the market managed to
exceed the highs made in 1981, so as far as index forecasts go, this was a pretty good one.
I actioned this using some shorts on the budla system then prevalent and soon developed a small
reputation for being a bearishly inclined analyst! Not that this was intentional but then I am happy to
recollect that even though the market did not really favor much participation in those days, going short
helped you to earn the budla ( or contango charges paid by the buyers) and one was happy to make
those small but consistent gains. Also, it taught me the important lesson of the trend being paramount
to success in the market, a valuable lesson that so many youngsters today seem to overlook. In their
anxiety to capture profits, the state of the trend is often missed and technical signals are taken out of
context. They will not work with the same efficacy when used out of context. But how can you know
that if you have not spent time burnishing your basics? When you are in a hurry to know and cant find
the time nor effort to inform yourself sufficiently, these kind of mistakes are bound to occur.
Oscillators and Elliot Waves
Sometime during 1984, I came to know about some technical analysis training programs being
conducted by TalakshiGosar and Ramesh Parikh. Gosar was a journalist and wrote in the Gujarati media
and later on for the Daily while Ramesh Parikh was an active trader. I quickly signed up for the program
and it was held at the Broadway auditorium at Dadar on weekends and to my surprise, very well
attended. For the first time I came across other people who were equally passionate about the subject
of TA and that was an interesting development. We all began to share what we had and some of us
pooled in our chart drawings. We Xeroxed each others charts so that we could have a larger repertoire
and stayed in touch. At this seminar I got to meet people like Deepak Shah, DhirajGutka, SiddharthLahiri
each of whom would go on to establish individual identities in the world of technical analysis in the
years ahead.
This seminar is the one where I got introduced to Elliot
Waves for the first time and I was blown over yet
another time by another aspect of technical analysis. I
was already quite adept at traditional technical analysis
and I found Elliot to be a finer detailing of the trend
action that the Dow theory lays down. As I often like to
say in my training seminars, the difference between
Dow and Elliot is the quality of the brush used for
painting. The former does the job with the brush used
to apply a coat of paint on a wall whereas the latter is
like painting an expression on a girls face on a canvasyou need to use those fine hair brushes to achieve the right expression. Since I had already read up a
good amount of detail on basics of TA, I did not attend the seminar of Gosar and went directly for the
Elliot seminars done by Ramesh Parikh. He was a good teacher. My concept of a good teacher of Elliot is
one who is able to convey the concept of Degrees in wave structure clearly to the audience. Perhaps,
since my mind was already somewhat prepared for TA by the work I had put in over the past 3-4 years, it
was easier for me to see the wave structure as it unfolded but I would still give credit to Rameshbhai
who was able to put across the concepts of Elliot rather well. I know the difficulty of this job from my
own experiences at teaching this subject in later years. Many people simply dont get the degree
19
concept and are therefore unable to really use the power of EW analysis. Progress labelling, as Neely
later put it in his book, is the key to forecasting with Elliot.
At the same seminar, we also got introduced to the concept of an Oscillator and here was yet another
twist to the technical tale! We learnt about the ROC (Rate of Change) and the fact that there could be an
indicator that could signal us ahead of time that the trend was about to change was almost
revolutionary! Here we all were, using trendlines and moving averages and patterns (largely trend
following items) and trying to do our best to forecast with them. And along comes Gerald Appels
creation, the ROC, with its concepts of Overbought/Oversold and Divergence and that was enough to
create a small Tsunami in the technical world. Although J Welles Wilder had set the ball rolling in 1978
with his book on designing oscillator systems, we got to hear about the ROC first (which was actually
created by Gerald Appel in 1982 and published in his book Time Trend II) possibly because it was fresh
off the press or maybe Rameshbhai got that book ahead of reading Wilders classic! Be that as it may, it
kindled in me a fresh zeal to now follow the mathematical side of the market.
By 1984 I was well established in my private Dental
practice but still chose to be in the market every single
day. Dentistry was work but market was a passion!! So I
would board the train from Mulund (where I had my
clinic) for VT, a journey that took just over an hour and in
those days, the trains were much less crowded than they
are today and we would get comfortable seats as it was
also not the peak time. I used the one hour to update my
moving average tables (I still continued with the 5-15-25
MA system) and now also would calculate the ROC using a
calculator. I also had my price notebook with me and
would also draw the intra day chart (using just the 4
points of data we had OHLC!!) on a chart paper that I
carried with me every day. So it was a very busy one hour
and there was no time to waste really because I had to
complete all the work before the train reached VT! Taking
a bus to the BSE towers, I would spend the time looking at
the intra day chart that I had created and make plans for
how to approach the markets. Of course in those days
there was no index trading so we largely used the index
charts for deciding the overall directions of the markets.
It may be hard to conceive for todays youngsters as to how one could construct a pseudo intraday chart
using eod data. Here is a shot of how it looked (I got this programmed into a software, about which I
shall speak later).
20
It certainly gives one a better idea of how the market moved compared to just the daily bar chart. Let
me remind youngsters reading this that in 1984 we had no computers, no intra day data, no software,
no data service even! We had to collect all the data by ourselves, plot it on the chart manually and draw
in all the lines and channels and calculate the moving averages and plot them as well as now do the
calculations for ROC for every stock that we were interested in. Further, we had to maintain a separate
chart of Intra day (as above), daily, weekly and monthly. If the moves became bigger, we had to redraw
the chart using a Ratio chart paper (for Log scaled charts) and one for each time frame! So you can now
understand the kind of odds that we were battling to do TA and I cant think of anything other than our
enthusiasm that kept us all going!
We came across the RSI only sometime around 1985, when someone managed to get a copy of Widlers
book. Word spread like wildfire in the TA circuit. Here is this magic indicator where, as soon as the level
of 70 is hit, you sell and when the indicator hits 30, you buy! Wow. All problems solved! Compared to
the ROC (which is a 0-based oscillator with no definite levels above or below) the RSI seemed like the
new improved version, a DilipChaabria model of an indicator, if you will!! People who knew about it
spoke in hushed tones, like they were carrying some sort of State secret. I remember that I had to
almost wrench it out of a technical analyst journalist called Rao (I forget his first name) and it was only
after he was plied with a couple of pegs at the Press club, that he opened up and told me what it was. I
almost didnt sleep that night! I was up till early hours of the morning, working out the RSI for stock
after stock and then plotting them on the chart.
This may appear to be laborious work- and it was- but when you love the subject so much and it holds
out all kinds of promises of deliverance to you, I doubt if you will ever see the work involved! Thats how
21
it was for me. It continues to remain so till this day. There are days even today when I work almost 15-16
hours in a day. People at home complain that I am taking on too much stress with all this work. But I
remain mystified till today- I never feel a morsel of tiredness even after putting in a long day on the
charts. When you remain in love, everything is just perfect! I fell in love with TA one fine day in the attic
of the New and Secondhand book shop in 1980. It is 2015 today and I dont think that love has
diminished even by an iota!
Gaur Gaurang Prabhu of Iskcon, in one of his discourses, speaks on tiredness from work. He says that we
are all tired at the end of the day when we come back from the office even though we travelled there in
our AC car, we sat in our cabins in an AC office, we returned in the evening similarly in an AC car driven
home by the driver. And during the day, we probably spent approximately a couple of hours working on
something. The rest of the time was spent on drinking endless cups of tea, attending meetings (a good
way to pass the time), chitchat with colleagues and generally trying to pretend to be working when the
boss is passing by! How right he is about the assessment of an average day of an executive in an office.
Why at all should we then feel tired when we get home, asks Prabhu? He answers, saying that we are all
the time worried about the past or the future and we seldom spend much time in the present. To
illustrate his point he asks us to look at a child. He plays all day but as soon as you reach home, he is all
over you, asking you to join him in play. You wonder where he gets the energy from? It is 11 pm at night
and your 3 year old is still tearing across the hallway, full of beans and refusing to come to bed!
According to Prabhu, this is because the child is only concentrated in the present and is never worried
about the future or held down by the past! He offers that as a solution to our problems of our tirednessjust be in the present. Your energy will never dissipate. I realise that when people are seeing me work for
long hours on the charts and presume that I should be tired, they are seeing everything from the pastfuture perspective. In reality, with charts, I am so completely in the present that, just like the child, I am
never tired! Thus, Technical Analysis is way to be full of energy and live a full life! It is only those that are
concerned about their lack of success with analysis (the past) or worried about how it will shape up (the
future) that will find themselves strained by the work.
I soon became an Elliot enthusiast and in that course I came across one Subramaniam who lived near my
house in Sion and was like a full time trader. He introduced me to W.D Gann and gave me a book by
Donald Vodopich called Trading for Profits with Precision Timing. This book sought to combine one
element of WD Ganns work (the angle lines) with Elliot wave counts. I thought it pretty ingenious and
was grabbed by the fact that you could draw a trendline with just one data point. That book proved to
be the starting point for what would become a lifelong association with the methods of W.D.Gann! As
ever, when a topic grabs my attention, I devote my entire time to it. Thus I began a search for Ganns
material and that led me to an old gent named Kanjibhai Shah, who was kind enough to lend me some
more material on Gann as well as George Bayer and also set me off into greater research into that topic.
I started to research Ganns work and this proved to be a
labyrinth from which, 30 years later, I am still to emerge! I
used Vodopichs methods as a base, wrote to the Kansas
Board of Trade to get myself a Gann Angle plotter (paid $5 for
it), and now plotting Gann angles on my charts became the
additional chore during my chart updates in the train journey
from Mulund to VT every day! Fellow travelers would often be
amused about what I was doing but that deterred me none. I
would just smile back at them and continue with my work. I
have never allowed other peoples skepticism to denude my
22
enthusiasm ever in any matter. Once you are convinced why should other peoples opinion really
matter? What matters is only that you have found sufficient reasons to get convinced and not just doing
it out of some sudden fancy. Today, Gann angles are one of my predominant ways of analyzing the
charts. Thank you, Subramaniam, wherever you are. You set me off on this path and it has taken me far.
Be blessed.
Mention cannot go without Atul Xerox, a small stationery shop near the BSE that played such an
important role in the life of every budding technical analyst back in the mid 80s. I dont quite know how
he got the books, but somewhere along the way, Atul Xerox managed to do a copying job on some TA
books. Word then spread that you could get to buy TA books from there. Soon the shop was flooded with
orders! I used to be a regular visitor to find out if something new showed up. And every now and then
something would show up. It really didnt take any extra skills for any other Xerox shop to do the same
thing at that time. But somehow, everyone with a TA book headed out to this one particular shop to get
it copied. He would take nice back-to-back Xerox, bind the book nicely and soon he became quite
knowledgeable about the books too! He had, I recall, a ready list of books available with him as
inventory! The only thing I think he didnt do was put out some poster announcing the New Arrival!! Had
it not been for this small shop and its enterprise in getting hold of more books of the genre, we would
have all found our learning curve getting elongated by another few years. Richard Schabacker, HM
Gartley, Max Guenther, John J Murphy, Edwards and Magee. You name it, we read it and created our
own collection of Xerox edition of these books because of Atul Xerox!! God bless this shop for meeting
our needs at a time when getting books from abroad was unaffordable for most of us.
With so much chart drawing it became more and more difficult to find the time and work started to lag.
I was soon finding my entire Sundays going away with me just completing the weekly/ monthly charts,
drawing the averages, the angles, calculating the oscilators etc. This was the time I hired a couple of
college going youngsters who would come home every evening and update the charts daily. It solved the
problem of time but I really missed the extra sharpness it would give me to actually plot the chart and
develop a feel for the chart as prices develop. I would strongly suggest that new entrants to the field of
TA should attempt to draw at least one or two charts manually and keep that on. It makes a big
difference in how you see the prices.
The switch to markets as a fulltime occupation
During my frequent visits to the market I happened to meet another fellow south Indian by name
Sundar Iyer who was a subbroker. The initial affinity may have been owing to the fact that there were so
few South Indians in the market that it was natural clannishness to go with a fellow traveler from the
South. However, I am of a liberal nature in such matters and it was more the sharp business acumen of
Sundar that really got me together with him and we became good friends. The friendship survives into
today and my admiration for his abilities remains undiminished. I dont think I have met very many
more people in my life who have a greater focus on how to make money from the markets. Sundar has
that incredible sense of stock picking and though he would never admit it, I truly believe that he has
such fantastic timing skills inbuilt in him that he could have been a TA with ease! I teamed up with
Sundar and we made some very good money when the markets began doing better in 1983. Somewhere
in mid 1984, Sundar bought a membership card on the BSE and with that came the moment when I
made the switch to markets as a full time career. I always knew that this is where I wanted to end up. I
thought, when I set up my clinical practice in 1980 that I would stick to Dentistry for at least 10 years.
The bull market that took birth in 1984 and my friend Sundar buying his membership by that time, cut
short the Dental career to a brief four years. I left the profession without any further thought on 19
August 1984 and entered into the broking world full time.
23
Chapter 3: Core Competence- and why it is important.
Looking back at my life, I think it was a huge mistake for me to become a sub broker. You see, I was
never cut out for that kind of work. I thrived on intellectual pursuit, on detailed study, correlations,
patterns, forecasting, tracking, and finessing. A broker needs to be focused on business, on running the
day to day operations with detachment, being on the ball with payments both to and from clients, on
client acquisition, on creating client satisfaction, on firmness of handling delinquency etc. I had none of
those qualities. I didnt have those aspirations!!
I should have become a full time Analyst. Unfortunately in those days, it was early days still for Research
to have become the common practice that it is today. Fundamental research was being done by a mere
handful of people. Publications were just starting to come on to the scene. Technical analysis was largely
unknown. But I was already into analysis as a passionate endeavor. And I had people asking me for
advice. I mistook that interest as a possible business but did not realize that it was not for broking
operations. I really should have launched an Advisory business as early as 1984-85. I am certain I would
have done far, far better than I fared as a sub broker.
Be that as it may, I launched into a career as a subbroker. This
certainly interfered with my dedication towards technical analysis
as I had lesser time to devote to it. Nevertheless, I persisted and
possibly have to credit my passion for the subject for finding me
the energy. I continued to read, develop methods but application
was sporadic. As a result, the output also remained sporadic. I
actually think now that I wasted 10 good years of my life (actually
my peak productive years from the age of 25 to 35) in pursuing a
career that was just not my core strength. Indeed, I did harm to
myself by moving away from it and paid the price.
But the broking business also taught me a few lessons. It taught me how not to judge people from what
they appear. I work on trust and honesty and I believed, wrongly it now appears, that everyone else
would transact with me the same way. However, I found out later, much to my dismay, that people
were seldom who they seemed to be and when the odds turned against you, it became difficult to know
who is your friend anymore. Turning shades faster than chameleons, former friends suddenly seemed
like unrecognizable strangers and people whom you carried thru your own efforts turned against you
when you least expected it.
But having got into it and then trapped in the deep end, I found it difficult to swim my way out of it. I
have always relied upon my innate ability to help myself out of any situation in my life. Since my parents
died early (I was only 14 then), I have pretty much led my own life, although my elder brother was a
tower of strength behind my back all the time. I had relied more on my own counsel and not sought help
even when I should have. This was one of the occasions when I was clearly out of my depth and should
have reached out. Not having done so led to a delay in exiting this business. Let that be a lesson to
budding business people. At younger ages, we are never as smart as we think we are. Wisdom comes
but with age and experience and there is no substitute for it. If you are young and if you are in trouble,
never hesitate to ask a knowledgeable elder for advice. Your life may take quite a change.
I stuck to the broking line right till the last day when the trading ring shut down in March of 1994. By
then I had moved to market making for the last two years, a line of work where my strong memory and
24
ease with numbers helped me make a success of it. Thus I was sad to see the ring come to an end. It was
an era of a rather easy way of making money. As a market maker you remain largely in control. And you
can manipulate the system to your advantage. This helped quite a few of the brokers to amass
considerable amounts of money thru the years. I myself did well in that line in the last two years of my
Ring life.
Electronic trading commenced soon thereafter and by then the NSE had also been launched. I
remember that we all used to refer to it rather derisively as the 3-stock exchange because, around its
early days, the bulk of the trading at the NSE used to comprise of just a few stocks. The BSE ruled and
most of us were certain that the NSE would be a failure! But as history has shown, it was the BSE that
went into a decline over the years. Was it complacency among the brokers? Was it the battle with the
authorities about the various impositions on the brokers? Was it the fact that the members were from
the old school while the NSE brokers were the newer lot who were more affined towards the
electronic trading system? Maybe it was a bit of all these that finally did the BSE in. But an organization
like the BSE cant be kept down and there is far too much history around it and behind it. Its making a
comeback slowly on the derivative front as well as perhaps in the other market segments. Today the
NSE can well be blamed for being a monopoly a complaint that was once levied against the BSE!
The transition into the electronic trading media was
not a smooth one. Only the far sighted among the
players saw the paradigm shift that was now
present- we had moved from a closed circuit, broker
driven system- opaque at best- to a totally different
order driven system where the entire country was
on an even level. Jobbers, markets makers, brokers
no longer enjoyed the kind of secrecy and
dominance and ability to control that they once held
and this created an upheaval in the way the business
was done. The initial BOLT system favored a Market
Making driven system and we all believed that we would continue to dominate as in the days of yore
and therefore plunged right in. The stage was larger and we felt we could probably gain even more! But
we were all in for a nasty surprise ahead.
The transition took a while and just as in every case where there is some confusion with the process,
here too the mischief mongers were quick to appear. They took advantage of the loopholes that still
existed in the process and succeeded in mulcting many a trader, me included. I didn't mind losing money
because of my errors or misjudgments but I found it difficult to accept being cheated by a faulty system.
With the money disappearing fast, I thought it prudent to move away from this activity and preserve
what I had left.
For the first time since 1982, I was leaving the market place, something that I never thought would ever
happen. What lesson did I draw from this phase of my life? That which the self help books advocate all
the time- stick to your core competence if you want to do well. I wasted, yes wasted, about ten years of
my life doing something that I was not very good at and in the process, moving away from building my
strength in my subject. It was not dissimilar to how people approach trading. Everyone thinks he has the
competence to do it, little realizing that it requires a complete overhaul of one's personality. I went into
broking without much thinking, believing it to be an extension of what I wanted to do in the financial
markets. The years did give me some learning and experience but not the kind that I desired or really
needed. Of course one is enriched by any experience that one gathers in the markets. From that
25
standpoint, the chance to experience the broking business, a first- hand look at the trading process etc.
were good experiences no doubt. But the price I paid for moving away from my core competence area
was high. I would definitely not advice budding analysts to ever take their sight away from what they
want to do in this field. It is a voluminous area of work and there is little scope for time and energy
dissipation in non- core areas.
26
Chapter 4: Trading Markets at last! The great leap forward for technical analysis.
The first charting software in India
Even through the time that I was engaged in stock broking work, I never let go of the passion for TA.
With lesser time available for charting I toyed with the idea of developing a software. By 1988, charting
software had made an appearance in India. The first of these was an outfit called RPK Software and they
caused a small flutter by having a software that would plot and print charts. We were all mesmerized of
course. RPK ran a chart print service and we would all line up there to buy prints of different companies
at stiff price! Then destiny played its part. My wifes cousin who worked at TCS back then came home
with a friend of his. I spoke to them about my interest in developing a software and this friend, his name
is AbhayPatil, said he could do the job. He was planning to quit TCS and turn freelance anyway. And that
is how ASA software came about! Abhay quoted me a fee of Rs 39000 for the development- a rather tidy
sum of money back in the late 80s. I did not have all the money, so I got together a couple of fellow TAs
of that time one of them being Kalpraj Dharamsey, one of todays bulge bracket market players- and
together we funded the creation of ASA which was meant for our own use only. Of course none of us
was really interested in the commercial end of the software and we never bothered about becoming
owners of the software. RPK never really marketed their software and were keener to be a chart print
supplier. Abhay kept working on the software and by 1990 he had come up with a much better version.
My belief is that ASA was truly Indias first technical analysis software and I am happy that I provided all
the inputs for its creation and it still continues to be my top favorite software of all time despite the
fact that I have another 10-20 more!
But the credit for the first commercially available TA software probably was bagged by another that was
made at around the same time. This was Trend, a software made by KiranSagarkar, who has been
another indefatigable player in the TA software field. Kiran proved to be more business savvy than
Abhay and I recall he launched the software (even though it was not complete) with a small bang that
attracted the TA community. To this day, Kirans products remain at the forefront of TA softwares and in
its current form is probably one of the most widely used one.
ASA is associated with VivekPatil- Abhays brother- who is the better known face. He is the market guy
while Abhay continued to remain the technology person. They have seldom pushed their product
aggressively and are content to be among their clients who are actually quite a number, by the way. I do
believe that the ASA users are a band of loyalists and forever remained devoted to this software. My
belief is unshaken that it is even today one of the most advanced piece of software available and though
Abhay can be held guilty of not moving it to a Windows format (it still runs on DOS!) that does not take
away the value of the software. I have personally put in methods and tools and technics way back in
1988-90 that many of the even modern day softwares cannot boast of. Abhay is a gifted programmer
and one who understood the nature of technical analysis almost the instant it was conveyed to him. I
think it is just providence that we both managed to meet.
27
I cant let this narration go without giving people an idea of the kind of difficulty we used to have with
plotting a chart even using a software! When I got the software program design commissioned, we were
all working with a PC made up of just two floppy drives. Many youngsters today dont even know what a
floppy drive is! For their information, these were drives that had a capacity of 64 kb, yes thats right, KB.
Today we are used to GB and TB is becoming common place. So imagine working with 64kb. For
comparisons, GB is 0.1% of TB and MB is 0.1% of GB and KB was 0.1% of MB. So what you are used to
today (TB) is really a One Billion times more capacity than where all this began! We used to have the
program disk in Drive A and the data disk in Drive B. Plotting one chart would take approximately 2-5
minutes! I still remember the day when I got my first 1 MB hard disk drive and transferred all the
program and the data into the hard disk- I felt like I had climbed the Everest or some such!
When we first designed ASA, we had to manually input the data into the machine and I recall
requisitioning the services of my wife and sister to input the data every day. My sister would read out the
quote from the Economic Times and my wife would then punch that data into the machine! This process
would take a few hours- longer if you maintained more stocks. Tracking all stocks- despite the PC- was
out of question! I think it was not until a few years later that the BSE started making available the prices
as a file. My peon used to go with a floppy disk every day to the exchange and get the file which we
would then upload into the software. In the beginning we got just A group stock prices. It took another
couple of years for the BSE to make the B group prices available. This is why you find Group A shares with
history from 1984 while Group B shares data is available only from 1990 (even though many of these
companies existed before 1990 or even 1984!). Even on promise of payment, older data could not be
made available! Fortunately, I had hand written price data of many shares dating from 1968 and I have
painstakingly input all that data into the software and created probably the longest data base available
today for many of the stocks. VivekPatil took the trouble to get hold of RBI data of prices and created
those charts in ASA, which is also a great help to get a long-term perspective on stock movements.
Contrast all that with todays net based delivery of ready processed data that downloads and updates
your database all within some 5 minutes! What a boon technology has been!
In retrospect, it now seems like the machinations of the mischief mongers that forced me out of the
jobbing game was probably one of the best things to ever happen. Now that I was no longer attending
the market, I got a chance to get back to Technical Analysis once again. And by now I also had the
benefit of a decade plus of market experience. And also, I was older. I threw myself back into the subject
now with redoubled vigor. This was about the time when I got into teaching and writing full time.
The Great Leap Ahead for Technical Analysis in 1995
By then trading had got established and the NSE actually became a trading exchange. More, the
different settlement dates between the NSE and the BSE led to substantial arbitrage work. This was a
bonanza for many and many a substantial fortune was built on this business thru the next decade. It was
the time when the market was hungry for some good quality advice on trading. With computerized
trading now a rage, the bid-ask spread came down to just a tic or two ( in contrast to a tic size of 2-10
points during the Ring days!) and that made day trading viable. Also, the volumes went up substantially.
During the period of 1995-1998, the market essentially went nowhere and created a large range
between 4000-3000 on the sensex. Since we had just ended a long term bull market, we were also
undergoing a substantial correction in equity prices and hence fundamentals simply stopped working.
People knew only the fundamental route even to trade and hence were bereft of ideas of how to play
the new type of market. Budla had got banned long back and there was no easy way of making money
any more for those who were uneducated about the ways of the new market place.
28
I believe the trading market of 1994-1998

along with the NSE coming to fore as an
exchange that really was the giant leap
forward for technical analysis.
With known methods failing steadily and miserably, people were forced to seek out something that
addressed the shorter time frames. The only that fits the bill is technical analysis and that is how TA
started on a rising path- something that is yet on the ascent in 2015!! Fortunately I realized this change
well in advance and I came out with (possibly) the first intra day trading advisory service in the country. I
called it Techni Trend and I used to send this out by fax to subscribers. There was still no email back then
because the internet was not yet born (at least in India). The product met with a resounding success,
something far more than I had expected. You can imagine the paucity of services during that time and
the hunger for such a service by the fact that I used to send out the advice late in the night and people
would wait up till late in the night (as late as 1 and 2 am!!) just so they could get the product. I kid you
not. This is a fact.
It got to a level where I simply could not send the fax by myself and was wondering how to scale up
when I had a chance meeting with an old school mate of mine one day in the local train. We were
meeting after a long time and he mentioned that he was working with Global Telecom who was in data
dissemination. This was like a godsend! I promptly landed up at his office the next day, signed up for the
service. At one stroke my problems were all solved. All I had to do was send my letter to Global and they
would in turn send the fax to all other clients of mine!! Techonology was once again at hand to push the
scale higher!
This was the chance to really scale up but somehow lack of vision and some other financial compulsions
at that time prevented me from going all out and I think I lost out on a very big opportunity to grab the
mantle on the advisory service at that time. I was probably among the few people who was doing it at
that scale and using technology to push the barriers outward. But I slackened when I should have really
hit it hard and I live to regret that till today. But the only thing that I can say makes me proud is the fact
that the trading advisory service that is such a rage today- was probably launched for the first time in
India by me in 1994. It was a market that I helped create.
Pioneering TA Training Programs
Another area that I think I may have had a strong influence is the creation of Technical Analysis training.
I never knew I could train and had never ever tried it before in my life until 1993-94. Thru the years I had
kept up my exhaustive reading on books procured either from Atul Xerox or thru my own efforts from
my friends overseas. This had made me sufficiently knowledgeable about methods within TA and the
over 10 years of application had burnished that knowledge in as well. This prompted one of my
acquaintances to suggest that perhaps we could hold a training program to educate others on use of TA.
He offered to take on the logistics of creating such a program and to my surprise he managed to rope in
over 40 students in no time. Along with PrafulChheda, a long time friend and colleague, the two of us
launched the first training program (after that effort by Gosar and Parikh back in 1985) on TA at the
Indian Merchants Chamber. The program went thru so well that we were requested for a more
advanced version and we created and conducted that too. This set off a domino of training programs
and soon I was doing training programs with various people like Tushar Gandhi (one of the earliest
proponents of Elliot Wave), KiranSagarkar (who set up a permanent training room at his office in
29
Nariman Point) etc and I created several programs of my own as well. For about a year or two, I think I
was doing more training than any other activity!
The training activity put me in touch with many, many people and this is what I still love about the
training business. You get to meet such a variety of people with such varied interests and approaches
that life really gets enriched with all that company! It was thru one such chancy meeting that led me to
the UTI Institute of Capital Markets. I created and designed a full fledged 5-day program on technical
analysis there with Ms.UmaShashikant (who is currently running her own company engaged in training
corporates on Finance) and this was one of the proudest achievements of my life. We ran that programvery successfully- for about 7 years and in that course of time, I think, almost every Institution in the
country sent their people to attend the course. This proved to be a fantastic opportunity to meet with
people from the Buy side and it proved to be very handy when I moved on from training work in later
years.
This period laid the foundation of my training business, something that I do to this day. I do it not just
because it is a business but because I LOVE training. It is a fantastic way of keeping yourself informed
about the latest happenings in the TA world. It forced me to read, it forced me to practice and it forced
me to think. All of these had positive fall out in my own trading and investing as well as in my writing of
letters and articles. As I stated earlier it is also a great way of meeting people from various walks of life
and when you have interacted with people as a teacher, the relationship is quite different than if you
have interacted with them as a businessman. The love of the subject and my passion to it somehow
came thru in the training programs and that led to sellout sessions at all times. What could be a better
win-win? I enjoyed every minute of the interaction and I made sure that my attendees did too. Both of
us then go away happy for the experience.
Around 1996, the BSE Training Institute came into
being and I became a visiting faculty there for
delivering lectures on technical analysis. It was under
the stewardship of Dr Ghonasgie in those days. They
used to pay a small token for the lecture and I always
remember that because Dr Ghonasgie would always
have the payment ready in cash even before I would
deliver the lecture! Even though I never did any of
these for the money, this experience did leave a
strong impression on me and in later years when I had my own training set up and would invite outside
speakers, I would always make it a point to see that they were promptly paid. It is amazing how some
happy experiences of your life govern your actions much later in life! I remained associated with the BSE
Training Institute for a very long time- till 2010. It was a very fruitful and productive relation for both of
us. I designed and presented the multi week Comprehensive TA program which ran to packed houses for
almost all thru the time that I did it. I think we did at least two to three programs a year and all of them
were sell out affairs.
An enjoyable feature was the offsites of the training institute where we got to interact with other faculty
members and also brainstorm on ways and means of making the BSE Training a bigger player.
30
People who have been part of my training program may be surprised to know that there was a point of
time when I could not speak a single sentence coherently! I used to suffer from the most horrible of
stammers all thru my school and college years. It had got to a point where I would speak only if I
absolutely had to! Speaking in public was unthinkable, as even speaking in private was an effort. As I
grew older of course, the problem started to diminish but I never even dreamt that a day would come
when I would stand up in public and address them! And I think that I have Technical Analysis to thank for
making that transformation. With my knowledge in the subject becoming solid thru reading and
constant practice, my sense of confidence in speaking about it- and indeed, my eagerness to showcase it
to the world- was probably what prompted my friend to suggest that we do a training program. Without
thinking a moment I said yes to the venture. I recall that fateful day when I just stood up and started
speaking! Just like that. No fear. No thought that I would stammer and make a fool of myself! You see,
stammering is really not a physical disability as many seem to think. It is just a habit! That one develops
as a child and then it is reinforced thru pressure from all and sundry around you. Everyone, ironically,
means well and wants to help the stammerer. But little do they realise that matters are actually
becoming worse every time they do this! All you got to do is regain your confidence in your speaking and
it will disappear. As I started to speak about technical analysis, I realized that I knew the subject well and
that gave me the confidence to speak and this turned into a virtuous cycle. As I spoke more fluently, the
more confident I became and the more confident I became with myself, the better I did at delivering the
lectures! Moral of the story for stammerers: Find something that you are confident about, that you know
well enough. And do it in front of others. It worked wonders for me. I have stood in front of audiences of
more than 1000 and people and spoken at length for few hours and never stammered once. Thank you,
Technical Analysis. I wish I had found you when I was in school!
High point of my writing career: Capital Market Technicals.

I did a stint for about two years as an Editor for the only truly TA magazine that was ever publishedCapital Market Technicals. This was one of the most rewarding career switches in my life. It came at a
point when I was trying to juggle several things at the same time. During the day I held down a job as a
Prop trader for a broking house (more about that later) and then I would scoot post market to Capital
Market office to function as the Editor of a by now defunct magazine that I was entrusted with
breathing back to life. Capital Market Technicals was launched in 1992 and I was associated with them
since the beginning (see sidebar of that episode)but the magazine went into a slide after the main
people quit. They had some desultory sales of a less than 100 copies a month and I was brought in to
revamp it.
It was a dream assignment for me. For one, I loved
the subject. For another, I loved even more writing
about it. And third, here was a challenge- to bring
something that I love back to life. I remember
remarking to my brother at that time, These people
dont even know that I would pay them for this
opportunity! and here I was, getting paid to do this
job. Gods were certainly kind to me!
I began first by rejigging the format from a magazine
clone of Capital Market (the main magazine) to a
Tabloid format. I started writing a page one Editorial
as a signature piece and was happy to see it being well received. I completely revamped the content,
31
making it truly technical analysis in content rather than the few pages of desultory content that was
being featured by a motely set who were running the show back then. The impact was almost
immediate. In the absence of anything like it, the sales picked instantly and I personally went around to
each of the vendors all over Mumbai city- yes, I walked to each and every one of them to ask about
sales, returns, interest and whether they could sell more if we supplied it to them. The common
complaint I got from all of them was that the issue was coming out late (almost Wednesday late) and so
I changed the schedule completely and ensured that the Tabloid hit the stands and the street by
Monday come rain, sunshine! Once again the sales picked up nicely and after a copule of months, I
simply doubled the price of the paper from Rs 7 to Rs 12. Imagine the surprise of all in the office when
they found that the sales did not dip at all!! It was feared that we would have lots of rejects but we
managed to sell as many as we did at the old price!
I ran the paper for about two years and those were intensely satisfying years because I remained
steeped in my subject, writing extensively about it, researching it and generally had some great fun! To
promote the Tabloid as well as an inhouse TA software that was developed, I toured all over India,
creating and delivering training programs as well as promoting the software and the magazine.
But as the clich goes, "All good things must come to an end". The death of the bull markets led to the
demise of the public issue market as well. Now, the IPO market was the life blood of Capital Market
magazine- they almost survived on the ads from the companies issuing shares afresh. During my stint as
Editor of CM Technicals, I did not really pay any attention to getting advertising for the magazine
because the general policy back then was that all ads received would be for the mother magazine
Capital Market and only spillover ads would go into CM Technicals. This suited me just fine because my
skill was in writing, analyzing and training and improving the software and not really in seeking
advertisements from corporates. But when the mother magazine itself began to reel from the absence
of ads, they were forced into business decisions that began with the shutting down of regional editions
of the main magazine until finally, one day, it was the turn of CM Technicals. Without much ado, they
informed me that they would not be continuing with the magazine and that was that. My career as an
Editor came to an abrupt halt.
Personally I think it was a poor decision to shut the division down. The tabloid
was actually recovering its costs from stand sales itself and for staff we had only
three dedicated people (me, a DTP setter and Biju Samuel, a very talented TA
who went on to do rather well for himself in later years) and the rest were on
sharing duty with the main magazine! The management looked at it from purely a financial standpoint
and did not perhaps appreciate that there existed a completely separate audience for this area that
would continue to buy the magazine thru thick and thin. All because there was simply no alternative to
it! I believe that if we had subsequently raised the price of the tabloid to say 20 or some such, it would
have still sold as many copies. They just didnt give it a chance. Pity. It was great while it lasted.
One of the happiest moments in my life occurs when, even after many, many years passed, people
would still come up to me and say what a fine magazine CM Technicals was and how they actually cut
their teeth on what we wrote in that magazine!! There was a gent who had filed all my Editorials and
preserved them and showed them to me a decade later!! Even to this day, there are still people who
connected to me thru their reading of Indias only TA magazine, Capital Market Technicals!! Its always a
great delight to meet and converse with such people, just savoring the fact that your work made a
difference to their lives! There are few things more satisfying in life than to know that you made a
difference. Capital Market Technicals gave me that opportunity.
32
Chapter 5: The Institutional years- the value of developing perspective

I became part of an Institutional broking set up in 1997, joining Apple Stock Broking as a technical
analyst. Familiarity with some of the fund managers of domestic MFs those days owing to my interaction
with many of them as a part of my training work with UTI Institute of Capital Markets led to me taking
on additional responsibilities with the Institutional Sales desk. This period was a mixed one. There were
people who were receptive to the technical inputs and there were those who were not. I had a simple
approach to the issue. If the man was receptive, I spoke. If he was not, I didnt. I recall an incidence when
our team went to one of the big Bank treasury to meet its main investment officer. He was volubly antitechnical and told me so as soon as we reached there. He probably expected to me shrivel up and die or
some such! I just told him, I am not here to convince anybody of what I do. If you have no interest in
hearing what I have to say, I shall simply wait by the side until this meeting is complete. I dont think he
really appreciated that answer (he had a reputation in the market for being hard on sell side brokers)
but there wasnt a damn thing he could do about it either, since my answer was matter of fact and noncombative. Funnily, at the end of the meeting with the other analyst, he did ask me for my views. And
sat thru the entire explanation and even came to see me off at the door!
The point I am making here is one that I learnt from the teachings of Wayne
Dyer. He said in his wonderful book (Your Erroneous Zones) that you teach other
people how you are to be treated. I find this to be quite applicable to life of a
technical analyst in particular. There exists an image problem with the subject
and practitioners often go into a defensive mode (or a very aggressive one) when
dealing with other people. This becomes a bit acute when they are placed in
environments that are, traditionally, not very oriented to technical analysis. My
take is that you are doing something that you like and prefer. What another
thinks of it is not of any significance. You dont need anyones approval of what
you do. Bear that in mind wherever you are.
It was really my second job stint that changed my perspectives a lot. I was with ICICI Securities and was
head of their Institutional derivative desk. This involved travelling to meet up with FII clients who were
situated in Asia (mainly), the US , Europe and the Middle East. Visiting those offices and seeing the scale
at which things were being done and the variety of ways it was being done was indeed a revelation. It
succeeded in giving me the perspective on market activity as no other event could have. When you see
the activity of the actual originators of the moves that we see on the charts it kind of changes the
perception you have about the tools that you use. I dont mean this to sound like the tools become
inconsequential. Only that the way the tool actually works and tracks the market becomes even more
evident! I do believe that this phase of my life is what made my understanding of technical analysis far
deeper than it was. Fortunately, I had created by then a sufficiently deep reservoir of understanding and
knowledge about the subject and therefore this was like putting the finishing touches on that base.
Interacting with the traders of these big banks was also an experience by itself. Just as at home, there
were many believers and non believers as well. However, the difference was that they would always be
open to listening to what you have to say. Since I was by now heading the FII desk, my job became more
of Sales oriented and I put the technical knowledge to full use. This is where the commonality of the
framework of the subject comes in most handy. We can, using the same approach, be able to analyse,
interpret and forecast all financial asset classes. In the course of my meetings I came across people who
were part of varied desks- equities, derivatives, fixed income, commodities and forex. Since traders
overseas handle a variety of assets as a part of their trade book, they were interested in many of the
33
markets. Knowledge of technical and its adroit application truly saved the day for me. I was equally at
ease talking about the Kospi or the Nikkei as I was with the Nifty. We could discuss the US treasury yields
or the Case Shiller index for home sales as, after all, they were just another chart, following similar rules
that govern all charts. What was only needed was to add some background knowledge and that I did
because I was always fond of reading and kept myself abreast of whatever was happening in the world.
These interactions proved to be very beneficial for me as I had to do much work to stay ahead of the
curve as the people I was dealing with were also a very sharp bunch of global traders and fund
managers.
I recall visiting the main fund manager of Govt of Singapore, who was a hardcore fundamental analyst. It
is one of the largest institutions and the size of their book boggles the mind. Similarly, I met with the
fund managers of Janus Capital and Aberdeen, also big long term fundamental asset managers. One may
wonder here as to why we should waste time speaking to such people- we are after all technical
analysts, right? Wrong! While everything is most certainly discounted in the prices, that does not mean
that there is nothing else! You cannot escape the clutches of your own mind and you do live and serve in
a society, in an environment that is composed of other people who may all not be of the same
philosophy as you. While Magee may have written in his book about the setting for an ideal technical
analyst I believe that is a utopian idea. For us to progress in this world we have to be able to take on
whoever is in front of you and come out better than the other man. I saw in all these meetings an
opprtunity to present the case for my subject in a manner that could be understood by the other person
and in a way that it may be beneficial for them as well! It then becomes a challenge and you are at your
best in doing what you are doing! Those meetings with the fund managers of these large organization
also widened my own perspectives and educated me in the ways of the large Asset management
companies and showed me how to place my own knowledge of TA and my own work in a context that
made it enabling! It was indeed an enriching experience and I am thankful for those years of travel and
meetings that truly opened up my mind to the world of finance!
It was sometime in 2005 and I was on a visit to Hong Kong and met with some new clients, this time a
very large global bank. We were at an evening get together and since it was the first interaction with
their team, I decided that I needed to do something out of the ordinary to get their attention. Most of the
talk was going around the fundamental aspect of our markets and stocks etc. So when the chance came
for me to speak, I boldly stated that I am expecting the Sensex to cross 10000. This was at a time when
we were still languishing around the 6000 levels and so that caught the attention of everyone. Now,
everyone loves a bullish forecast and when it was something a bit outsized, it gets the attention of even
the most skeptical person! I was roundly ribbed for a while with people asking whether I already had
belted down a few pegs and whether I was feeling OK and it was not some jet lag or some such that was
making me say these wild things! But I explained my forecast (and it was indeed my forecast and not
said just for effect). I think more than anything else that my colleagues and I did that evening, it was this
big call that really got the juices flowing. The client became one of my biggest accounts in subsequent
years! Fortunately, I also got a guy who was quite technically oriented as the point person on their side
and this helped to build the relationship so much faster. For that year, this client voted me as the best
regional sales person for Asia! So, you see, you never know how far you can go with TA. Dont get limited
to the tools, think big!
Travelling to the US, I met with several hedge funds and some of them were very active on the High
Frequency trading portion. This was another education. I could get to see first hand the workings of a
machine based trading system that changed several paradigms about the way forward for TA as well as
for the markets. Some of those are fructifying in India today.
34
The reason for recounting these episodes is to impress upon the young technical analyst that whenever
and wherever he gets a chance to broaden his vision about the market, about the business, about the
trends in the business, he should grab that chance. It will
change the way you look at charts almost completely.
Your depth of vision will increase and you will be able to
string together different events in a more constructive
way to form the big picture. Ultimately it is all about big
picture analysis. Everything flows out of that. While TA
gives you the ability of being able to stand on your own
two feet without the assistance of any one else, you also
have to realize that there is much to learn beyond the
tools and technics of TA. Reading a few books and
attending a couple of seminars will not provide you with
that. Only actual experience in an environment will.
It is my strong belief that the ultimate use of technical analysis is for your own trading and investing.
This form of analysis is so dynamic in nature that is is almost impossible to translate all of its nuances to
others particularly those that are not familiar with its contours. But before one reaches that point
where one is trading for oneself for a living, it is mandatory upon us to capture all the experiences
possible thru technical analysis such that the field may become as useful to us as possible. This is
achieved by going out there into the world of investing and trading and advisory and analysis and
training. I exhort everyone to give a shot at each of these areas in order to become a more rounded
personality. Finally it will be your personality that trades- technical tools will only help in that endeavor.
So it is our responsibility to shape that personality as best as possible and also as early as possible.
After spending several years in the Institutional circuit, I finally began to tire of the game and somehow
it lost the charm. After you have been abroad a few times, that loses the draw as well and travel then
becomes a chore and spending time away from family begins to tell. I finally left this arena by end of
2009 to begin the next phase of my life. Once again, I was coming back to technical analysis full time.
35
Chapter 6: TA as a business
Remember, you have not created anything new here!
I set up an advisory firm way back in 1992. That was the first time that I started writing a newsletter. I
actually started this as a note to myself. Kind of, verbalizing of my thoughts to help me action then
further. Then some of my clients saw it and they wanted a copy of it for their reference. Soon that grew
in number and one day I thought that I was sending it to enough number of people to make it into a
priced activity. Thus was born my weekly newsletter, Trend Trader. I have been writing this weekly letter
in an unbroken fashion now ever since that year- making it now 22 full years of publication! I dont know
if that is a kind of a record for a long running newsletter service. I would probably think, that in India at
least, it should be one. I know of colleagues who were with me on the road to TA back from the 1980s
but I dont think anyone of them is writing a newsletter- at least not consistently into this day. I wish
there was some way it could be branded Indias longest serving market newsletter ! That would be a
nice feeling! I still write this letter and it still continues to be a verbalization of the thoughts that run
within me about the market. Thus it has never become a chore and therefore I have never tired of doing
it!
I had mentioned earlier about creating the Daily Trading
advisory market. Now of course there are probably a
million of those services! Every second person who reads
a book or half or attends a course here and there,
believes that he can make market calls. And there are
always takers for it. So setting yourself up in business is
not really so difficult. But the more important question is
whether you can scale it up. I dont quite have an
answer to that. On the one hand I do believe that there is
a whole lot of people out there who need some good
quality advice on what to do in the market. So the
market segment exists. But thru my experiences of the
past 20 years I also realize that this is a shifting segment,
meaning that the takers for these advisory services keep
changing because of their own inabilities. You see it is so much easier to give advice (which is why there
are so many of those service providers) but so very difficult to take advice! Many times, the proffered
advice is being seen thru the lens that the recipient has on currently. If he is bullish, then it is more than
likely that he will take quickly any bullish advice given to him. In this mind set, he will also be quite slow
to take bearish advice if it were to come thru. Further, all advisors offer stop loss levels and targetsmany times multiple targets. But the client who receives the advice seldom follows the stoploss level
(thus leading to bigger losses) and is always too early to take the profits, probably even ahead of the
first given target itself (thus curtailing the profits). So, this becomes a bit of a losing game for service
providers. Their track sheet and the clients performance in the market seldom tally. Since no one likes
to blame himself, the usual reproach is that the calls dont work or dont work well enough.
The difficulties of trading advisory
This is where technical advisory work varies so much with the fundamental approach. Since the outcome
of a technical call is almost immediate, the users are too quick to judgement and branding of the call or
the analyst as being good or bad. Longer plays are difficult to handle for most clients because there is no
commitment to it. Somehow, the commitment only comes in when people feel they have bought a stock
on delivery basis! So, most of the time, I find, people bail out of positional plays at the worst possible
36
time! It is so easy to say that one would like to do swing and positional trading but my experience is that
almost all the people currently engaged in trading are incapable of doing this kind of trading!
When it comes to day trading it becomes another ball game altogether! A number of reasons have
colluded to create this huge day trading market. It is a big cauldron of brokers wanting high churn in
their business so they keep pushing intra day calls. For this they employ the cheapest possible technical
analyst they can find (never mind the quality, after all, who cares if the client is making money or not?).
The whole thing becomes a hit and miss affair. On the other hand, clients who are attempting this have
no real preparation for this game as a business operation. They think this is some sort of a sport and
approach it with no skills whatsoever and are therefore destined to make money only when their luck is
shining. Since that is not a consistent way to build any wealth, the feeling of there-is-no-money-intrading gets perpetuated.
It is not that there is no money to be made in trading- on the contrary there is a LOT of money to be
made in trading. However, it requires probably more
education and skill building than becoming, say, a
neuro surgeon or a super-specialty scientist! To
become the latter people will happily spend money
and about 10 years of their lives to get there. But try
telling people to spend time and money to equip
themselves for the trading business and they will
probably stare at you like you were from a different
planet or some such! It baffles me that people will go
on doing the wrong things over and over again but will
baulk at the very thought of spending some money and
time to get out of that problem! It is almost like they
have some sort of a death wish!
It would be ideal if people chose to follow advice as
directed and also learnt that they need to become
more skillful in this business and take steps to do so.
But that seems like a very utopian idea! What they dont realise is that in this business you have to be
making three decisions ALL the time- whether to buy or sell or continue to hold. Every price move
demands that one reviews all three decisions! And, this has to be done with every position that you
hold. So you can imagine the difficulty if you are prone to trading in many items- the decision making
problem then gets compounded several times! Small wonder, then, that people find it difficult to trade
and succeed. There are certain skills that need to be acquired. Without doing that, you have no hope of
succeeding.
In this business I find it a bit funny when some technical analysts try to hide some approach or method
from others. Is it their belief that they are on to something that is only known to them? I refer you back
to my earlier episode during the 80s when we all came to know about the RSI. At that time, it could be
said (to a limited extent) that if you knew about RSI, then you were indeed probably among the few that
did and hence it made some sense to keep it under wraps. But today, every single piece of news is
known to everybody because of the Net.
One of the things I would suggest to budding TAs is that they should remember that they have not really
created any of the methods that are in use today. We have all learnt it from some book or course or
seminar that other people have been generous enough to share. Unless you have created something
37
completely new and original, pretending that you know more about some tool and hence that
knowledge is to be hidden is ridiculous.
Sometime ago I taught the Fibonacci methods to the analysts in our office. Being part of my set up they
were taught the methods in full detail, beyond what is covered in the standard texts. Sometime after
they began practicing these methods, we offered a program on Fibonacci studies. One of the analysts
who was working on these methods was almost appalled that I was about to reveal these methods in a
seminar! He felt that these are not worth giving away at such low prices! I told him, Had it not been for
the grace of people like Constance Brown, Caroline Boroden, Robert Miner etc (to name just a few) and
their generosity to share their knowledge with us thru books and seminars, how do you think you would
have got the knowledge that you do today? I did not create any of these and I just learnt it from these
masters. All I did was give it a small local flavor, made a small adjustment here and there to suit our
markets and offered it to you. We dont own the copyright on any of it. Brilliant people have discovered
some ways of doing the analysis and we are borrowing from them out of their generosity in offering it to
us. All that we do is add in lessons we have learnt from personal experience, back it up with some
additional research, and blend it all together into ways of applications that is (hopefully) useful and
practical for others.
He was chastened and continued working with the methods. I am most happy to report that he has
recently put together his experiences with Fibonacci and has created a free ebook for the sake of the
trading community!
Over the years, I have kept asking myself whether TA is really a subject that can be vended as a business
and everytime I come up short for the answer. Fundamentals is certainly not something for the small
investor but has been packaged in a manner that it can reach the small investor in a salable pouch!
However, TA is a different product altogether. There is too much individuality involved in the usage and
that makes its consumption very varied and quite subjective. It can work brilliantly in the right hands but
becomes a disaster in the hands of those who have not mastered it. I believe there is no half measures
when it comes to applying TA. But personal failures get attributed to the subject and since it has not
been packaged as effectively (or for as long and by influential quarters), it suffers from an image
problem. Those trying to create a business out of it need to be aware of this aspect so that they know
what to expect. It is only thru good work by all those who are in it today and will be tomorrow that the
subject will get its place in the sun, where it really belongs.
The facet of personal failures of the preacher as well as the practitioner has probably given rise to a lot
of apologists. Wary of the possible bad press, those wanting to sell technical services but dont want to
be branded as such carry euphemisms like Operator calls or Institutional info or some such nonsense.
Others brand themselves as quantitative strategists or even System traders. All these are just
different labels for the same output. These days a lot of fix-it-quick methods have hit the Streets in the
guise of high frequency trading strategies. There are many who claim to peddle what they call as
back-tested strategies. Again, I am skeptical about the quality of many of these products. Some Johnny
somewhere rigs together a bunch of rules in an Amibroker afl (mostly) and then peddles it as a failsafe
method for automatic trading!! Obviously, there are enough suckers out there to keep these guys in
business. Yet another trend that I find these days is the trade-without-charts brigade who want to
portray that they are something that they are not. Ultimately, everyone is drawing the water from the
same well. It is just that they are branding their water with different names. So long as it is all about
generating business legitimately there ought to be no problem. But sometimes in zeal to do more,
people may forget that they are here to serve. Lets all never forget that.
38
Chapter 7: The view from the 37th Floor Looking back, looking forward.
As I stand today looking at the state of technical analysis I am happy and excited about its prospects. I
am calling it the view from the 37th floor because of the 37 completed years in the market. It is not
unlike standing atop the Arc de Triomphe in Paris. The Arc is a monument that links the old and new
Paris and in a similar fashion, I too feel like I am a link between the old and new forms of technical
analysis! I was there at the beginning when charts were being plotted by hand from basic , minimal data
collected with great difficulty to the current times when the best of computers and best of softwares are
available to move in a flash between asset classes, instruments therein and time frames and different
chart types with myriad tools and technics applied on them, all being done in the matter of seconds!
When you go to the top of the Arc, you see a magnificent view of about 12 different roads all converging
into the Arc! It is a breathtaking sight, and one that you should not miss if you get the chance! (Hell, one
should not miss the chance to visit Paris at
least once in your lifetime).
What makes me most happy is that thru the
years the environment has become more
and more of an enabler for the practice of
technical analysis. It has come a long way
from being a hard to practice art (not that it
stopped us in any way back then!) to
something that now works at the speed of
thought! It is a wonder how we all thought
in the 70s and 80s that we could ever make
money after those horrendous bid-ask
spreads (starting from around 2.50 to as
high as 100 points) and huge commissions
(200- 400bps) and sometime obfuscation of
rates by not-so-scrupulous sub brokers and finally the terrible, terrible liquidity of many stocks! But that
was the system and we all participated, joyfully and succeeded despite all these odds! Shows you how
inefficient the system was in those days! But now, TA can be practiced in a very sophisticated manner
and market inefficiency is being ruthlessly eliminated in a flash by machines working at mach-3 speeds!
Today I can see that traversing all those roads that led into 2015 have all prepared me for facing the
future with confidence. I am happy and proud that I have been able to pick up learning from the markets
and that I was able to give back something to it. I can honestly say that I have received more learning
out of trying to teach others the art of technical analysis and hence I have to pay thanks to all those
students who were part of my training programs. If it were not for you I would probably have allowed
my own learning to stagnate and finally go to seed. But the eagerness of the new learner, the desire to
be able to answer every question of his in as complete a manner as possible kept me in the forefront of
learning, of keeping abreast of latest developments in the field, in touch with the technological advances
that were going on alongside. None of those would have been possible without the active participation
of the hundreds of students who were all part of some training program or the other. This is my chance
to say thanks to all of them at one go!
39
The face of technical analysis is changing. As its usage increases by the day, attempts to take it beyond
the traders domain are almost constant. All subjects progress when they get some academics going at
it. The number of papers that are being written on various aspects of technical analysis has been
growing slowly but steadily. As realization strikes that the practitioner of the art is one of its biggest
variables, the possibilities have started to leap. Behavioral science has emerged and many of its theories
have beginnings in technical analysis precepts. As machines steadily take over the business the time
frame that is being addressed starts becoming ever smaller and this has led to technical analysis
concepts being adopted into an entirely new area of Quantitative finance. When the subject starts
making it to the pages of new age practices as above, the stigmas of old begin to drop away. Academicia
start writing on it and that begins to lend respectability. Models creation takes it into the realms that are
more practiced by the financial wizkids of today and as a result a greater acceptability has begun to
appear. The internet has reduced the barriers to information and advent of ebooks and webinars are
breaking down communication barriers. As ignorance fades, willingness to look at alternative ways of
analysis begins to appear. The future is very bright and sunny.
I am reminded of the cover of the CD of one of
my favorite music bands Vangelis (pictured here).
It shows a future that has computers linking with
robots with lightening powering it all up! On the
sides is a hawk, depicting us, imploring us to be
watchful like the bird, at the progress that the
world around is making!
I remain as excited about the prospects of
technical analysis today as I was back in 1981
when I first discovered it. The years gone by have
imbued in me a wider perspective in the usage of
the tools and I find today that looking at the
markets thru the charts gives me tremendous
clarity of what is happening and therefore be in a
position to create a plausible scenario for the
future. The same tools also let me track the future as it unfolds. How many others in the market can
really say that they enjoy that advantage? I am fortunate and blessed that despite a near decade of
veering away from the subject to some extent, I got the chance to get back into it completely. Many
times, once we move away from our chosen line into something else, life doesnt give us a second
chance at it. My life may have been dramatically different had it not been for the markets, but I dare say
that it would never have been as event packed and as enjoyable a ride as it has been.
I dont really think there is anything else I would do than sit with some charts and look at the
probabilities that could unfold. It is such a challenge to map the future. It is also such a joy to find it
unfold the way you thought it would. And at the times that it doesnt, it provides with you such fantastic
learning of things that you missed, the things you need to learn and understand and assimilate better,
the things that you dont realize were still out there! One never stops learning when using technical
because every day, as the clich goes, is indeed a new day! And for one who is always an eager student
of life and markets, could there be a better way?
J Paul Getty, the famous billionaire was asked the secret of becoming rich and he said, Be honest, work
hardand find Oil! If asked a similar question on what newbies should do in this field, my answer
40
would be similar, Be diligent, work very hard and make money!. Too many budding analysts forget
that their work should finally result in someone making money either themselves or their clients.
Analysis may be about being right. But making money goes beyond just being right. So to be a successful
technical analyst, you need to go a bit beyond technical tools. And that is, into yourself. You will then
start learning that technical analysis when applied in the right way to the markets, teaches you more
about Life than any thing else. I think that is its greatest reward. Go for it.
I wish you all the best.
Dr. C. K.Narayan
Mumbai.
March 2015.
41

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Reminiscences of A Technical Analyst

Around Dalal Street

Chapter 2: The Learning Years

Chapter 3: Core Competence- and why it is important

Chapter 5: The Institutional years- the value of developing perspective

Chapter 1: The long road to technical analysis

The unofficial Options Market on the Street

Chapter 2: The Learning Years

My first big forecast using charts

Chapter 3: Core Competence- and why it is important.

I believe the trading market of 1994-1998

High point of my writing career: Capital Market Technicals.

Chapter 5: The Institutional years- the value of developing perspective

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