Are we heading into second phase of bull market?
Published On: Friday, August 13, 2021 | By: Team KnowMyStock
A very important trait of any bull market is that it should have a very good breadth. as of now large caps, midcaps, small-cap all have been doing well. Almost all sectors and even the biggest laggards are doing well and that is very positive. We are staring at two parallel markets. Nifty at an all-time high, blue sky. But there are dark clouds over mid and small-cap stocks. We just need to take a step back and understand the price action that has led up to this move. If you take the Covid bottom in March 2020, from there the small-cap index has been up 233% and the Nifty is up 116% or 118%. What has happened is that from the base, the small caps have outperformed the Nifty. If that is taken into perspective, it is very logical that at some point in time, the large caps need to catch up or the small caps need to rest.
If we take that bigger picture, then the 3-4% correction that we saw two days ago, will not really bother you because the runup has been so big and the outperformance in smallcaps so big compared to the large caps.
This may be a relay race where the baton passes from the large caps to the small and midcaps and then goes back. Ultimately Nifty 50, which is the front line, is driven by largecaps, also gets into the act. Then after some time, the baton passes back. Net-net, the good point is that there is very good market breadth. If you look at sectoral performances, global market performances, what heartens is market breadth. If you look at equity markets, it is not just India, globally markets have doubled from the Covid bottom. The US is of course the mother market; Europe, which, has been an absolute dead place for almost a decade, is also at new highs.
Source: various sources
We are on Telegram!
JOIN our telegram channel to receive updates on Financial News and Stock and FNO Tips.
Click Here!
Follow Us On:
