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When we will get the next bull market rally.

Indraneel Sen Gupta 
on 24 March 2009

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When we will get the next bull market rally. Each and every one is having one question in mind that when the Indian stock market will come out from the downward trend and will make another bull market rally. In fact the answer to this question is difficult to give and next to impossible but still we have tried to figure out some of the possible ways by which we can find out when we will see the golden days back again. We know that monsoon plays an important role every year in the stock market. Monsoon have a strong impact on deciding the movement of the stock market. Monsoon effect first comes on agriculture where monsoon is the father where land is the mother. So a good monsoon results to good crop cultivation. Good cultivation by the farmers begins the journey of the stock market. Good monsoon effect have an impact on demand for fertilizers and tractors, and to a lesser extent, two-wheelers and consumer durables. Commercial vehicles demand start picking up from good agriculture. The link between the monsoons and demand for their products is tenuous for sectors such as commercial vehicles and consumer non-durables (comprising FMCGs, food products and groceries). Sales growth rates for these sectors seldom move in tandem with the monsoon performance. As is to be expected, fertilizers sales usually perk up when the rain-gods are munificent., so fertilizer shares are bound to increase. Tractor sales appear to be more sensitive to monsoon performance than any other sector. Tractor sales have moved in tandem with the quantum of rainfall about 80% of the time. However, swings in tractor sales can be much sharper than those in fertilizers sales. A bountiful or a deficient monsoon usually reflects in two-wheeler and consumer durable sales in the following year. The availability of cheaper financing options for both vehicles and two-wheelers have probably enhanced the affordability of these products to more consumers. When we come to the automobile sector there are another two sectors which will also benefit from the auto sector. Steel and capital goods are the two most important ingredients to auto sector. Steel sector will grow as commercial vehicle sales goes up and engines of the cars are made by the capital goods sector hence these sectors will also join the race of growth. So the majority of the growth will come from rural areas and this will begin the journey of another bull market rally. Moreover as inflation have come down followed with cheap commodity prices the cost of raw material along with other cost have come down to support the market. Lower inflation have spooked the hope of lower interest rates which will make the consumers to borrow at less rates enabling increase in purchasing power. Banks and other financial segments have also started providing loans to the companies to run their production along with loans to consumers. So it is clear that from the month of august and September we will find some good reports of the economy and the stock market will begin its bull market rally. So investors who have got locked their funds and don’t want to sell have some thing cheerful in the coming days to make profit out of their present losses. The investors should not sell the share where they have suffered losses and long term investors should focus to purchase quality and large cap companies. They should choose from the above sectors stocks as they will be the first to make an upward rally.




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Indraneel Sen Gupta 

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