Teji Mandi Explains: How to predict a bull run?

What’s Happening?

Sensex and Nifty had touched their all-time highs after coming out of the COVID-19 wave. Ever since the Russia-Ukraine war started and inflation began to rise, the stock market has come down over 18%, touching its 20-month average. If Nifty50 breaks the 15,960 level (20-month average), the market might slide ever further. According to historical data, all mega-bull market corrections found support at the 20-month average level. India is already in the bear market grip, and data shows that a bear market occurs every three years. But the question is - will we see a bull run from here or find the bottom?

Bull Run In Sight?

Eight months have passed since we started seeing the Nifty’s fall. Now, major bull markets are going through a bear phase. As per the data, between 1997 and 2003, the markets have been in a bear territory almost every single year. In a media interview Mark Mobius said, “Stock markets can go up in the face of high-interest rates. Temporarily there will be some impact, but in the long run, bull markets often are accompanied by high-interest rates and rising interest rates.”

Even if the market goes up, it might be in the presence of high interest rates and inflation.

Should This Concern You?

Continue to invest in fundamentally strong companies that are currently trading low. It’s the best time to pick up stocks you wanted to invest in since a long time. Bear markets are not all bad. They also provide a golden opportunity to invest more at a reasonable price.

What Lies Ahead?

Healthy corrections are a part of a bull market. Nifty went up seven times during 2003-07. Even during 2020, the market rose exponentially a year later, which also saw one of the highest numbers of IPOs launched. Therefore, once inflation starts reversing, the recovery will be faster than you imagine. All you have to do is monitor markets to see when the macroeconomic problems are receding. That’s when you will see signs of a visible recovery.