Bull run in markets only half-way through, says Rohit Srivastava of Indiacharts

The peak number was 98 percent of the stocks trading above their 200 DMA in October 2021

Nifty has hit an all-time high crossing the 19,990 level, but it might still be in the first half of a bull run, according to veteran investor, trader and founder of Indiacharts.

In a conversation with Moneycontrol's N Mahalakshmi, Srivastava said that the number of sectors and stocks participating in the rally has gone up in India.

“Slowly and increasingly participation coming in from different parts of the market and different sectors of the market. One of the ideal definitions of a bull market is that everything participates,” he said.

Also read: Nifty Close To 20,000 Mark, Where Do We Go From Here? | Indiacharts Founder Rohit Srivastava

He pointed out that, for almost 18 months till March, there wasn’t participation from mid- and small-caps “in a big way”. There were a few stocks that did do well and therefore the market did not crash but now the market is recovering from the previous lows.

“You're actually seeing a lot of stocks and sectors play out on the upside, whether it's realty or IT, which has sort of participated, even if it wasn’t in a big way. The metal sector is showing some sparks and this should improve as the dollar view strengthens in the coming weeks,” he said.

Srivastava said that one way to measure the participation of stocks in the rally is to see how many stocks are trading above their 200-day moving average (DMA). In Nifty 500, 79 percent of the stocks are trading above this level, he added. In the lows of March, only 29 to 30 percent of the stocks were trading above this level.

Srivastava said that this percentage of stocks, which are trending upwards has only been increasing. In July, it was 72 percent. Slowly, more and more stocks are moving into this category, he added.

The peak was in October 2021 when 98 percent of the stocks were trading above their 200 DMA. Since the market hasn’t reached these levels yet shows that the market is gaining, said Srivastava.

For people watching the US markets, he said that while many believe that only tech stocks have participated in the market rally with sentiment around AI picking up, other sectors have been doing well too.

Also read: The Underachievers: These 8 Nifty stocks are yet to join the bull run

“Over the last month, we have seen participation kicking in from the banking sector, which is now in the limelight because of the recent results, which beat expectations… You are seeing that (improved sentiment around) the Russell 2000 index, which is more of a small-cap index, but has a larger basket of stocks that were doing what our IT index was doing (making a triple bottom) and it has started to break out of that zone,” the founder of Indiacharts said.

In the post-Covid rally, when Nifty went all the way up from 7,800 to 10,300, then 79 percent of the stocks were above their 200 DMA. Using that data, it gives a perspective that the market is less than halfway through in the rally, he said.