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Are Bulls Really Back?

As the financial year draws to a close, the Indian stock markets have shown positive signs of getting back to old ways. But has the bear run really made way for the bulls? Let's wait & see

You've heard of 'Panic Selling', but what we saw today was more like 'Panic Buying!' The last two trading sessions in which the benchmark indices gained more than 8 per cent (almost a 1200 points rally), make us believe that yes, there is light at the end of the financial year, if not the tunnel. As the end of FY08 inches closer, it could well be a case of 'All's well that ends well'. But who knows, we still have four trading session to go for, before we enter the next financial year.

On the back of strong global cues, Sensex opened strong, breached the 16,000 mark and ended the day at 16,217, up 928 points, while the Nifty closed at 4,877. Both the indices were up 6% each.

Among the sectoral indices, BSE Realty was the biggest gainer, up 9.50 per cent, followed by BSE Bankex (8.10 per cent) and Consumer Durable (8.02 per cent). But the surprise element in today's trade was Information & Technology, which after a long time was resurrected. Hammered by rupee appreciation and US slowdown the index jumped 7.73 per cent. After a long time, Infosys made it to the Sensex's biggest gainer list and was up by nearly 10 per cent and ended the day at 1,492. BSE Midcap Index ended at 6,174.49 up 6.4% and Smallcap Index ended at 7,284.64 up 5%. Tuesday's gain was the fourth biggest gain in the Sensex history.

A point to note is the ever-increasing volatility in the Indian markets. Wild swings are very much becoming a part and parcel of Indian equity markets and is something the investors should now learn to cope with. In 2008 itself, there have been four instances of above five per cent increase and six instances of five per cent decrease, which is huge if we compare it with global peers. Let's hope that these ups and downs are akin to the functioning of a crankshaft, wherein the ups and downs means that the crankshaft is in a good shape.

As far as the talk of bear phase doing the rounds is concerned, here is the fodder for some those: “I believe that the long-term bull cycle in India is intact. In the short term, price corrections will occur whenever you have a run-up in valuations and expectations,” said Sandeep Kothari, Fund Manager, Fidelity MF, in an interview to Value Research, a fortnight back. Sandeep was among the twelve fund managers we spoke to, who all vociferously refuted the claim that Indian market is in the clutches of a bear. So, is it a dead cat bounce? Only time will tell, but certainly it is good omen as we stand on the threshold of the earning season.