After Friday's close, the Sensex is merely 3.5 per cent away from its all-time high of 15,800 odd. This seems amazing, considering that only a fortnight ago 13,000 looked like a looming possibility. Truth is, the recovery has been as sharp as the fall. Not just for India but for markets across the world. A couple of them like China and Hong Kong are at new highs already, the rest have some work to do. Among the ones yet to get back to highs India seems closest, but then we didn't fall as much as some of our peers. Brazil has rallied 15 per cent from it's recent lows yet has another 9 per cent to go before it reclaims the old peak, Korea has bounced 15 per cent but needs to do 7 per cent more and the Nikkei is still a good 10 per cent away from the July high.
It will be interesting to see how much of this gap the global markets are able to close as we move towards the September 18 Fed meeting and which ones go on to new highs.
An equally interesting exercise is to study which of the Nifty stocks are close to getting back to new highs. Many big ones like Reliance, Tisco, ACC, HUL and the capital goods lot have done it already. Among the heavyweights, ONGC and SBI need to do some work; both are around 6-7 per cent short of their July peaks.
Technology continues its under-performance with most stocks 8-10 per cent short of their highs. Cipla is an index lightweight but it languishes 12 per cent below its July levels. If Reliance maintains its gaining streak, it would need just a bit of a helping hand from SBI and ONGC to get there. ICICI bank and Bharti haven't exactly been on a tear so maybe they could do some catching up as well.
It was encouraging to see under-performers like autos do well this week.
While setting sights on new highs, it may be prudent to remember that we are entering next week with a sharp rally behind us. Having rallied 1,500 points in just a fortnight, it should be no surprise if the market takes a breather, even corrects a bit before taking a shot at new highs.
Nothing goes up in a straight line. The key takeaway from the last one month though is that we remain in a bullish framework where corrections, though sharp, get eaten up and the market is able to bounce back and reclaim lost ground fairly easily and quickly. It happened in May last year, then February and now in August.
As someone said, “What doesn't kill me, makes me stronger.”
(The writer is Executive Editor, CNBC-TV 18)