Sectors and stocks that lead 1 bull market rarely
participate in the rally that follows it. For example, Tata Steel was the
darling of the 1992 rally with a Sensex weight of 15.82 per cent, but it was
nowhere in the 2000 rally—by then, its weight had shrunk to just 1.52 per cent.
Similarly, Infoys was a favorite of the 2000 rally with a weight of 19.59 per
cent, but it did not participate in the 2008 rally—its weight reduced to 5.71 per
cent. Reliance Industries rode the 2008 rally with a weight of 15.68 per cent,
but did not participate in the 2015 rally as its weight fell to 6.12 per cent.
ICICI Bank, the stock with the maximum weight on the Sensex at its 2015 peak is
already slipping. While the counter has fallen 33 per cent from its 2015 high,
its weight on the Sensex has shrunk to 5.64 per cent.
Beaten down segments—since the Sensex bottom of Jan
2016—such as PSU banks, metals and commodities have seen a jump in the last few
months. Since these sectors did not participate in the last bull market in
2015, when the Sensex reached 30,000, could they be spearheading the next
rally? Or, is this just a dead cat bounce situation, a short recovery, in these
counters? Experts caution investors against assuming that sectors and stocks
that did not participate in the last bull market will, by default, lead the
next one.
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