Is it the Beginning of Bull Run ?

Bull run is one of the most fascinating words for the market traders and investors. This event occurs rarely in the market but when it does the indices and the overall market sentiment gets a green flow. In other words the entire momentum of the market is shifted and the market goes into the upwards direction. This is the time when the bears lose a major chunk of their money as they are on the short side of the market. This is the time when every penny invested in the market gives the best returns. No matter what the investment is, where the investment is the entire market it gives the best returns.

The current market situation can be called another such time wherein the bull run can be just on its way to hit Dalal Street. The major reason behind the same is the market breaking major resistance points and moving ahead. Lets understand the entire situation through index data and sector performance.

Bank Nifty, Nifty50 and Sensex

Nifty50 has shown major gains since the last 2 months. The Nifty50 touched 15000 range but it bounced back rapidly to cross the 17900 mark again within a span of 3 months. The reason behind the same is the rapid correction in valuation of Banking and Finance Stocks. This gets us to our next index Bank Nifty. Bank nifty consists of major banking stocks in the Indian Market. This means when the banking sector performs well the Bank Nifty will give best returns. The same situation has happened in recent times. The bank Nifty was trailing close to its 32 week low levels of 32000 range. This means the Bank Nifty was down from 41800 to 32000. This is almost 9000 points degradation in value. The Bank Nifty however covered most of its loss and is currently trailing at 40684 points.

The major reason behind why it seems that the market may be witnessing its bull run soon is the resistance level break. The Nifty50 has been trying to break the 18000 levels but it has been unsuccessful in doing the same. The markets have been very volatile since Jerome Powell announced that there will be constant rate hikes in future. However the Indian markets have been least affected by such news. The reason is after the news the market did give up gains but has rapidly bounces back to its previous levels within 4 weeks. 

Resistance and Indices

The most important resistance level is 18000 level for Nifty50. In the previous run as well the Nifty 50 retraced itself from 18000 levels and has been suffering since then for gaining its 18600 throne again. This time around it seems that the Nifty50 would be able to achieve the 18000 breakout and may also be achieving an all time high price again. Similarly Bank nifty would be expected to cross its all time high levels as well. 

If this happens then one can notice a rapid increase in the valuation of both these indices in a short time period. On the other hand the good news to support this target is Sensex’s valuation. The Sensex has crossed 60000 levels once again and this has been possible due to the technology segment showing some part in the gain rally at the last moment. Let’s do a sectoral analysis to understand the situation clearly.

Sectoral Analysis

The Indian Sectoral business has been on the right path since the COVID lockdown has been lifted. The recession rumors and inflation have been affecting the market rotation of liquidity. The reason behind this being the increase in interest rates. However though the rotation has not been seen in the market the businesses are still posting good results. This means that the Indian economy has been set on the right track.

The major outperforming sector has been banking and finance. The banking sector has been posting the best results and on the other hand the technology sector has been posting highly dissatisfied results. The banking sector has been seeing high loans taken and an increase in the CASA deposits. Also the FII have been investing highly into the banking sector. Hence the banking and finance sector has been witnessing good growth in stock valuations. 

On the other hand the technology sector is affected by the recession-like situation that has occurred in western countries. The major tech companies like TCS, HCL Tech, Wipro have their major businesses set up in these countries. Hence they have been witnessing their worst quarters. However the CEOs of all the companies have promised a strong comeback in the next quarter regardless of any recession like situation. 

Cement and construction sector has also been seeing a great upside since the last one week. Shree Cement has been one of the top gainers in the cement portfolio. This has happened since the announcement of removal of Shree cement from the Nifty50 stock list.

Overall Analysis

However the market flow seems currently it is evident that one can notice a strong in short run. Even the Nifty futures or SGX Nifty have broken through the 18050 mark and are trailing above these levels on 12th September late night. This can be the first step to note that the market may be giving its best returns till date if the FIIs show the same support till the end of Diwali.

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