Memory Lane - The last Bull Call
Published: Thu, 01/12/17
The Apt question should be When will I turn Bullish AGAIN?
Now 2002 is way back and who will remember what happened when but as I keep store of a lot of my publications I came across this note that I sent out in Sharekhan in January 2002 as a few months after 9/11 the memories of the most recent bear market were still Loud. My clear call was that the Bear market had ended and a Bull market that could last a decade was starting. The best one since I started out in the Markets and so I decided to share it with you. The mood of the note speaks for itself about that times that were.
So When will I say this again? I believe sooner than Later, the end of winter expected by 2013 postponed to 2016 is still not over, but closer to the endgame than it ever was before, because the Cat is out of the bag. The Cat that eat up the banks is now known to all. The fix cannot be far behind. I see light at the end and soon. Happy 2017.
The Immortal Bears
Teaser: If you believe that Bears have become immortal. Don’t bet on it because 2002 will bring back the Bulls.
It was a year of reckoning for the Bulls. The Bears never had it so good. Never in the last 20 years had the Indian stock markets seen a bear market that was this big. How about this long? Well there was a long bearish period for the sensex during March 1986-March 1988. That was a big two years. During that time the market retraced 61.8% of the preceding bull rally. But the last two years saw a bear market of mammoth proportions. Especially if you measure it on a broader index like the BSE 100 index. It retraced 100% of the bull market.
What makes 2001 even more a year that the market will remember is that it was a year of realization. As if the early shocks of the crash in IT stock prices was not enough the new year started off with a huge sell off in prices of IT stocks. Against this for the first 2 months of the year there was a rush to buy economy related stocks like ACC, BHEL, HPCL, and RIL. But Gold rush reached a dead end with a Budget that never had the ability to deliver. You may want to blame it on Tehelka or Ketan Parekh. But the markets had turned technically bearish well before these events and the flow of news assisted the sensex in achieving levels that nobody wanted to believe.
The goodbye to badla was sad because it sucked away all the liquidity the market had built up over the last couple of years. The introduction of futures has brought back very little of the lost Glory because although you can see interest build up in speculative futures counters. Other stocks of the A group that benefited from the Badla system have lost their identity. So did this have an impact on the technical picture of the market. No it’s a big myth that such changes and many others actually change the way you read charts to forecast stock prices. Prices are independent of it and discount such changes over time.
Finally at the end of a long bearish phase is there light at the end of the tunnel? Yes there is. As mentioned above the longest bear market of the sensex was 2 years. If that is anything to go by this bear market for India should be over by March 2002. Is that optimistic? No. Technically it is possible and the second half of the New Year should bring back some of the Glory to the Bulls. Wishing you a happy and bullish new year!