In the absence of further bad news, selling fatigue may be the reason stocks begin to move up
Illustration: Sameer Pawar
The first hint of a bounce back is always met with disbelief. Is this real or is this too good to be true? Yet, this is a question investors and their money managers, who’ve suffered bruising losses in their portfolios over the last year, are increasingly asking. After all, Sensex has been flat but midcap index is down 22 percent.
There are initial signs the market is in oversold territory. Take the case of auto bellwether Maruti Suzuki. In August a slowdown in sales growth caused the market to shave ₹66,000 crore ($9.5 billion) off its market cap over the next month. Monthly auto sales data released on the first of every month became a keenly watched metric with the stock nervously yo-yoing on that day. February sales remained virtually flat (they rose 0.9 percent) and the stock ended March 1 up by 2 percent. The stock is still around the same September 2018 levels with a 27 percent lower market cap. The decline has, for now, stopped as the market waits for earnings growth to catch up with valuations.
(This story appears in the 29 March, 2019 issue of Forbes India. To visit our Archives, click here.)