Having observed Indian market for the last 15 years, there are three things I can safely say: 1) In the long run, you always have to be a bull 2) A powerful bear can bring even the biggest bull down to its knees in the medium-term and 3) A chameleon wins more often than not in the short-term and he ends up making smallest of the gains.

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Since the day Nifty bounced from 10,000, my view has been that we are in for a tradeable pullback. Now, whether this is a counter trend move within a larger down move or start of a fresh move, time will only tell but it surely has been a move that people should have participated in.

Unfortunately, a large set of people have missed out purely because of the fall preceding this run.

We hear a lot of people say October was a bad month for equities because Nifty was down 5 odd percent. There are two reasons this could be argued: 1) Market showed classical signs of accumulation in midcaps which is exact reverse of distribution. Simply put, while in distribution, index is up and midcaps fall, in accumulation the reverse happens. The midcap index ended in green for October. 2) More importantly, in first half of October, market went through despair (a phase after capitulation). Even the best of results won’t move stock prices by even half a percent. And by second half of October, stocks were going up on bad numbers. Ingredients were in place for a big counter trend rally.

But then, this has all played out you would say, so what next? Well, for starters, let’s look at this table:

We might discuss crude, IL&FS, NBFCs, RBI vs govt, etc. until cows come home but this is simply a move of divergence between developed and emerging markets. Last week, Indian market was up 7.6 percent in dollar terms (higher than rupee terms for a change) but absolutely in-line with rest of the emerging markets.

Is this a start of some kind of reversal of the developed markets vs emerging markets move for the year? For now, while the market is rewarding those buying the dips, it can change very quickly like it did in the last week.

First Published:Nov 5, 2018 12:39 PM IST