Sectors and stocks that lead 1 bull market rarely participate in the rally that follows it. For example, Tata Steel was the darling of the 1992 rally with a Sensex weight of 15.82 per cent, but it was nowhere in the 2000 rally—by then, its weight had shrunk to just 1.52 per cent. Similarly, Infoys was a favorite of the 2000 rally with a weight of 19.59 per cent, but it did not participate in the 2008 rally—its weight reduced to 5.71 per cent. Reliance Industries rode the 2008 rally with a weight of 15.68 per cent, but did not participate in the 2015 rally as its weight fell to 6.12 per cent. ICICI Bank, the stock with the maximum weight on the Sensex at its 2015 peak is already slipping. While the counter has fallen 33 per cent from its 2015 high, its weight on the Sensex has shrunk to 5.64 per cent.
Beaten down segments—since the Sensex bottom of Jan 2016—such as PSU banks, metals and commodities have seen a jump in the last few months. Since these sectors did not participate in the last bull market in 2015, when the Sensex reached 30,000, could they be spearheading the next rally? Or, is this just a dead cat bounce situation, a short recovery, in these counters? Experts caution investors against assuming that sectors and stocks that did not participate in the last bull market will, by default, lead the next one.
Register Now For More Profit:
0 comments :
Post a Comment