Why the bulls are cautious despite the market rally

 

It values ​​hunting, but bulls appear to be relatively risk-averse, betting on blue chips and better-known companies.

• Persistent poor performance of small- and mid-caps indicates panic.

The Indian stock market may have boomed in the last one month, but there is still an element of panic. The broader market rally was led by large-cap stocks, as investors preferred the relative safety of bluechips to mid- and small-caps. To some extent, it is defensive buying in times of global macro-economic turmoil. It is also unusual, a kind of trend reversal: Historically, small and mid-caps tend to outperform when the Sensex and Nifty are up.

playing waiting games

The BSE Sensex had closed at 60,867 on Thursday, up 7.6% last month. Call it value hunting, but bulls appear to be relatively risk-averse, betting on blue chips and better-known companies. Bargaining was seen in banks, non-banking finance companies, IT and auto stocks.