The Bulls are on a rampage on Dalal Street. The BSE Sensex has surged by more than 1,000 points in March. The Sensex surged by over 500 points, yesterday. The rupee has been strengthening against the Dollar and has touched a 2 month high as Foreign Institutional Investors (FIIs) lap up Indian Debt and Equity. The rupee was 69.63 against the Dollar. FIIs have poured more than Rs 8,000 Crores in Indian markets for the month of March so far.
So, why are the stock markets going up in March, when they fell heavily in February? Indian stocks zoomed to over a 6-month high with hopes that Prime Minister Narendra Modi would retain power after the Lok Sabha 2019 elections. The main reason for this is the Balakot air strikes inside Pakistan in response to the Pulwama terrorist attack in Kashmir. Polls have predicted a return to power for BJP under Prime Minister Narendra Modi.
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Foreign Institutional Investors or FIIs have pumped more than Rs 8,000 Crores in Indian stock markets in March so far. This has pushed the BSE Sensex to a 6 month high.
Why are FIIs pouring money in stocks and Indian debt? The trigger for this is the US Federal Reserve or Fed. The US Fed has placed rate hikes on hold because of the global slowdown. FIIs are looking for markets to invest and India and other emerging countries fit the bill.
The Election Commission has announced the final dates of the Lok Sabha Elections. Elections begin on April 11th and polling is held over 7 phases till May 19th 2019. Counting of votes starts on May 23rd 2019. Many Opinion Polls predict BJP and Prime Minister Narendra Modi will retain power after the Lok Sabha Elections.
SEE ALSO: Stock Market
The small and midcap stocks have bounced back. Many stock market experts say this is not new. It happens just before the Lok Sabha elections.
Midcap stocks and smallcap stocks have significantly underperformed, compared to largecap stocks. This has been the sharpest underperformance in midcaps and smallcaps in the last 15 years. The macro scenario has improved and valuations of midcap stocks are very reasonable after the correction. Investors are picking up midcap and smallcap stocks and this has led to a rally in the stock markets.
The US markets were led by gains from technology stocks. Sadly, the Boeing 737 Max 8 crash in Ethiopia is weighing on the markets. British MPs will vote on whether to block the UK from leaving the EU, without a deal on 29th March 2019. The Government has announced that most imports into UK will not attract a tariff in the event of a no-deal Brexit. The European markets have gone up ahead of the crucial Brexit vote.
The breadth thrust is an important technical indicator. It shows a dramatic shift in market breadth. This happens at the beginning of a durable uptrend. You also have the breakout thrust which is when more than half the stocks show key breakouts, simultaneously. A breakout is when a stock price moves outside a defined support or resistance with increasing volumes. The combination of breadth thrust and breakout thrust signifies a bull run.
SEE ALSO: Bull Market
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