Has mkt met all parameters of fresh bull run?

With the abatement of initial fears (reed sub prim, yen carry trade, nuke politics at home), the Sensex and Nifty have been performing consistently for the last two days. So, does this mean the parameters are in place for a fresh bull run?

Rajat Bose of rajatkbose.com said the market is showing all parameters of a fresh bull run. If one looks at the Nifty, it has stayed above its 50 day exponential moving average for two consecutive trading sessions and above the 50 day simple moving average for one trading session, he said. This, he explains, is the moving average that has been holding the Nifty throughout this bull-run for the last four years.  

“Now that we above 14,850 odd for the Sensex and Nifty staying above 4,350 or rather 4,367, today that is a simple moving average level for 50 day,” Bose said adding that if we are above that, the next target would be 4,405 and the other two targets immediately would be 4,423 and about 4,450. He said that unless the market falls below the 4,270-4,235, support range, he would continue to remain bullish on this market.

“Although I was quite skeptical about this rally, now that it has met all the parameters of a fresh bull run, let’s see how it pans out,” Bose added.

However, J P Sinha, Head of Research and Director, Ambit Capital, doesn’t share this bullishness. "I will not be so bullish at this point in time as concerns remain the way it was. It has been alleviated to a large extent by the Fed rate cut and expectation of the next round of Fed rate cut. At the same time, the concerns have not completely gone out of the system. To that extent, my expectation is that there could be some more jitteriness in the market in coming days," he added.

Ambareesh Baliga of Karvy Stock Broking feels that the Sensex is quite close to its intermediate high and investors with a short-term approach should book profits. "The Sensex is quite close to its intermediate high because if it actually moves beyond this, it will get slightly overpriced. We feel that over the next 30-45 days, the markets will be in the range of 14,200-15,200. That’s the reason I am saying it's more towards the intimated high. At these levels, people who have a short-term approach should book some profits. On dips, I suggest people to buy long-term, which we are doing," he said

Arindam Ghosh, CEO, Mirae Asset India Investment, is bullish on India in the long-term. “We believe that the dust is kind of settling down now, though it’s been delayed a little because of domestic issues. We believe that the fundamental story for India looks stronger than ever before. Corporate balance sheets are pretty strong; current accounts deficit, at about 2% of GDP, is much lower compared to some other numbers that we get to see for other Asian countries. The consumption demand is strong and inflation is low. I guess India as a country looks very promising from a global allocation point of view,” he said.

However, he is quick to caution that any fresh instances of news coming in of names going belly up would also send fresh tremors across the world. “What we are currently getting to see is a kind of relief rally in anticipation of Fed action. But this can be largely temporary. One would have to really see how the trends develop in the first fortnight of September,” Ghosh added.

Some analysts like Sudhindra Ballal, Fund Manager, Daiwa Asset Management, sees more downside in the near future on global news flows. "There will be more downside coming in the near future because the information availability is not fully done yet. We can expect to see a lot of bad news in the next few days, in terms of when the markets get to know how much CDOs have been and how much hit each company has taken on its third quarter balance sheet. As the news comes in there will be some downside corrections in the Indian market," he added.

R Amarnath of Centrum Capital feels the markets will see more pain in the days ahead and investors should use these periods to buy more.

“It is going to be a period when it is going to be more of bottom up, because there is going to be volatility; several factors are there which have to play out. You are going to get to know the real numbers only possibly by sometime in October when the quarterly numbers come out and then that could have implications for the Christmas shopping etc across Western economies. There is a lot of stuff like that which one would keep waiting and watching. You are going to see more opportunities to buy on the downside at corrections. One should have a bottom up approach with specific prices for specific stocks. In particular, one should keep a bigger share of the investment pie possibly for midcaps as there are possibly more value and more growth opportunities in that space,” he added.