Indian Market: Is It Really in a Bull Run?

A Rally Amidst Optimism

On Thursday, the Indian markets experienced a roaring rally, with both the Nifty and Sensex closing at record-high levels. This surge was bolstered by positive developments such as the Reserve Bank of India’s announcement of the highest-ever dividend to the central government and an uptick in business activity, as evidenced by India’s service PMI hitting a four-month high. Market participants are buzzing about the possibility of a bull run unlike any seen before in the Indian markets. However, it’s crucial to examine the data to determine if this is truly a bull market, especially since most individual investors hold stocks, and general prosperity is often tied to the performance of these investments.

Digging into Data: The Reality Check

To get a clearer picture, we delved into the performance of Nifty 50 stocks. Our analysis revealed that 37 of these stocks are currently trading below their 52-week highs. This means that over 70% of the stocks in the index have not reached their peak levels from the past year. More specifically, 16 of these stocks are down by double digits from their 52-week highs.

Significant Declines: Key Findings

Among these, stocks like LTI Mindtree, HDFC Life Insurance, and HCL Technologies are trading more than 20% lower from their 52-week highs. Additionally, stocks such as Bajaj Finance, Asian Paints, and Kotak Mahindra Bank have declined between 18.62% to 10.66%.

Furthermore, 21 stocks are trading between 9.69% to 1.06% below their 52-week highs.

The Million-Dollar Question: Bull Market or Correction?

So, the million-dollar question: Are we really in a bull market? This analysis suggests a mixed picture. While it is common in a bull run to see some stock rotation, the fact that a significant number of stocks are trading below their 52-week highs indicates that this bull run may not be as widespread or robust as some believe. However, the limited number of stocks trading 20% or more below their highs might suggest that the market underwent a period of healthy consolidation rather than a severe downturn. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.