Back to 20,000. How unlikely it may have appeared just two days back, that the market would jump back to near all-time highs so quickly. That's a bull market for you. This time you can't even point a finger to FII flows, money has been going out on the margin from global funds yet the market is back to where it fell from. We can sit and look for reasons but that will all look like post facto justification; the reality, like it or not, is on the ticker. We are back to 20,000.
Almost every post-corrective pullback in a bull run starts with short covering. Since the extent of the rise has been surprising, every crack brings the bears out of their lairs, sadly only to get slaughtered again. As the Nifty turned from 5,500, shorts were trapped again. A couple of other reasons may have contributed. The US market got oversold, pulled back and sparked off a comeback in emerging markets. India was outperforming other Asian markets even in the fall, at the first whiff of global recovery we just blasted off the blocks. Locally, signs of a thaw on the nuclear deal may have provided the bulls a bonus trigger. It came as an unexpected positive and pushed the bears even further into a corner.
While all these factors contributed, the real reason is that domestic players are intent on keeping prices up. Either they are unfettered at the thought of restricted FII supply/activity in the next few weeks because of P-Note curbs or want to front run the eventual return of global funds in their registered avatars, a few weeks down the line. This move is a bit different in that sense; it's not FII money which is setting the prices, this is the power of local trader money. The local rich investor, trader, operator, corporate treasury--whatever name you want to call him by--is flexing his muscle. For the guy who owns stock it must be fun, for the one who does not it is pure frustration, for observers like me one can only marvel with the occasional raised eyebrow. One lives and learns.