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10-year data show bull & bear lock horns in January; where is market headed this year?

Although chances of a pullback remain high there are no immediate signs which suggest that the rally will reverse from here and Nifty can make an attempt towards 14500-15000 levels.

January 08, 2021 / 09:58 AM IST
Image: Pixabay

Image: Pixabay

Indian market rallied by about 15 percent in calendar 2020 and the momentum continued in the first week of January which helped Nifty50 and Sensex climbs fresh lifetime highs.

Historic data hints at a tough fight between the bulls and the bears in January. Data from the last 10 years provided by AceEquity indicates that bulls and bears matched pretty evenly, taking control of the market five times each in the last 10 years in January.

The Nift50 rallied the most in the year 2012 when the index rose by over 12 percent, followed by 2015 when it gained by over 6 percent.

On the other hand, it plunged by more than 10 percent in the year 2012, followed by a 5 percent decline in 2016 and a 3.4 percent fall in 2014.

Nifty50 072021


According to experts, the market could take a breather after rallying for four consecutive months since September, but bulls will not lose without giving up a fight.

Although chances of a pullback remain high there are no immediate signs which suggest that the rally will reverse from here. As a result, Nifty can make an attempt towards 14500-15000 levels.

“Stock market participants witnessed unprecedented volatility over the course of last year. After registering the fastest ever decline in Q1 CY20, markets have staged an astonishing recovery that has taken several indices to life-time highs,” Tejas Khoday, Co-Founder and CEO, FYERS told Moneycontrol

Khoday further added that given this strong upside momentum, he would not be surprising to see Nifty staying firm and inching closer towards 15000.

Technically, Nifty50 is trading near crucial resistance levels of 14200-14300 levels. Now, if the Nifty manages to break above 14,256 convincingly then bulls might be able to remain in control. If not, downside towards 13700-13800 is possible.

"From November 2020 we have seen the market move higher as Nifty has given almost 2700 points upside rally. Nifty is currently trading near its resistance level of 14,250, if it holds this level, we can see correction till 13700-13500. According to us, this time in the month of January bears can win the race," Atish Matlawala, Senior Analyst, SSJ Finance and Securities told Moneycontrol.

But, as of now, there are no signs that the rally is getting reversed. Hence, investors should remain long on markets and avoid going contra, suggest experts.

“Bulls seem to be dominating the street as of now because markets are bouncing back from lower levels almost immediately. Although this is mostly liquidity-driven, these higher levels look sustainable,” Gaurav Garg, Head Research, CapitalVia Global Research Limited.

“It is expected that the upcoming Budget will be stimulating and growth-driven with focus on specific sectors. this has therefore further fueled the Bullish sentiments in the markets,” Garg said.

Institutional Flows:

Foreign institutional investors (FIIs) who have poured in over Rs 48,000 crore in the cash segment of Indian equity markets since December 2020 are already net buyers to the tune of nearly Rs 3000 crore so far in January.

Calendar 2013 saw the highest FII flow in January at Rs 22000 crore  January 2013, followed by about Rs 13000 crore 2018 and 2012.

Experts are of the view that the global liquidity is likely to continue in January and as long as the liquidity wave continues, markets are likely to keep hitting new highs

“Given continued rebound in key economic indicators and visible solid earnings growth, the underlying strength of domestic markets remains intact. This along with expectations of sustained FPIs flow should continue to aid domestic markets,” Binod Modi, Head Strategy at Reliance Securities told Moneycontrol.

Disclaimer: The views and investment tips expressed by experts on are their own and not those of the website or its management. advises users to check with certified experts before taking any investment decisions.
Kshitij Anand is the Editor Markets at Moneycontrol.
first published: Jan 8, 2021 09:58 am

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