Is The Bear Market Over?
January 26, 2012 | In: Stock Market Analysis
So are we in a situation that we can safely assume that bear market is over? Well perhaps yes. The markets have gone up too fast too soon and it is too late now to be expecting to see new lows anymore. If the nifty was around 4700 – 4800 levels, we could expect to see 4400-4500 levels again but now we’re closing in on 5200 levels and thus I rule out any possibilities of new lows unless we see a big world financial crisis like we have seen in the past but we’re not Roubini and thus we cannot predict such things.
Now even if we do see some correction in the markets, it is going to be take us to old support levels and breaking that would need a lot of bad news and that we don’t have. Global markets were not correcting much and only our markets was constantly testing new lows and all that is over with the latest RBI’s policy where he cut CRR. So from the macro front, we have entered the phase where most of the macro bad news is priced in and the positive news are starting to outweigh the negatives. Imagine if the budget is some what okay and then RBI starts to cut rates, will markets be testing new lows or preparing for some kind of upside?
So there is a chance that the markets might have made their lows and is done with it. I wouldn’t rule out some correction in the markets but we’re at a stage now that every other person will jump into the markets on the next correction. I can very confidently tell you that there are a lot of people who are waiting with cash to jump into the markets, all it will take is a correction that will have people going crazy to buy. Why I feel a correction is due because US markets are also trading at a very high level and haven’t corrected in a long time. Our markets have gone up too sharp too fast and profit booking can take place at any time.
What are your views? Do you think that bear market is over? Please comment.
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