Sharp rally in Sensex (up 1400 points) confirms bear market in India – every bear market is associated with spectacular short covering
Kartik Punaskar
Jan. 25, 2008

Following a rally across global markets after the Bush administration announced an economic stimulus plan in the US aimed at stemming mortgage-market losses, Indian Sensex index skyrocketed 1400 points and the public and the institutions were bidding the shares up again.

Bombay Stock Exchange’s Sensex ended at provisional 18,380.59, up 6.73 per cent or 1,158.85 points. The index soared to a high of 18,406.25 from a low of 17,504.00.

It is typical in a bear market. Normally in a bull market, stocks fall sharply but rises slowly. The amount of rise is always more than the fall in a bull market although time taken to rise much slower than the fall. It is commonly known as bull market correction. The exact opposite happens in a bear market. The market falls slowly and rises in spectacular short lived but fast rallies. Institutions and individual cover their shorts when markets falls below certain benchmark moving averages and is presumed as oversold.

Sharp rally in Sensex (up 1400 points) confirms bear market in India – every bear market is associated with spectacular short covering
Kartik Punaskar
Bombay Stock Exchange’s Sensex ended at provisional 18,380.59, up 6.73 per cent or 1,158.85 points. The index soared to a high of 18,406.25 from a low of 17,504.00.
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