India: We Aint Seen Bears Yet!

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What if we told you us Indians have never seen a bear market in the last 15 odd years? Sounds weird after having seen the 2008, 2016 and 2018 periods but its actually true. What we possibly call corrections at times are nothing but volatility corrections – which we may be confusing with prices!


We often tend to confuse volatility and resultant price moves to attribute labels to it. Remember – the old adage – The higher you go the faster you may fall! The same applies to stock markets. However, differentiating between what is a normal fall and abnormal (bear) fall is critical to deciding participation levels.

Using conventional tools like price placement versus moving averages etc may work for trading very well as prices have a tendency to rotate to mean cylically – However, using price versus MA to define a market may be risky! As one may miss  market bottoms and  get back in too late (when conventional averages start giving buy signals- which may be too delayed)

We decided to use Bollinger Bands to illustrate the concept – covering the last 12 odd years – embedded in what we are saying.

Read more about Bollinger Bands and Mean Reversion at


The charts below are historical monthly charts for two key Indian indices – Nifty and Bank Nifty

Notice how they have always respected the middle Black line (Bollinger Average- the one in red is the Exponential Moving Average) which meant that the downward moves were actually just a corrective process in an ongoing bull run – that has never actually ended since 2003 (!) – to reduce volatility to normal levels. Prices retraced to Bollinger Average levels and bounced back soon enough! A fall would have meant the Bollinger mean would have been breached – which never happened.

The Midcap index came close twice or thrice but never actually went into bear territory while the Nifty tested it once only and bounced!




On  the other hand, the Dow actually has had a collapse below this level to bear markets in 2008-2009 – collapsing below the Bollinger mean – before bouncing back.

Its recovery has been  accelerated therefore – far surpassing global markets as it fell to Bollinger extremes and  sprung like a jack in  the box! Outperforming all global markets as the speed of “lift off” was from extremes!


If the Bollinger theory is correct – and the long term uptrend continues, 13k on the Nifty is a natural extreme (Bollinger upper band point).

And  if markets correct to 9800 (EMA placement on long term  charts), then the subsequent bounce would be to 14000 levels as the spring recoils and markets accelerate upwards at its natural speed of earnings growth.

A bear market in the current context is only if we fall below 8000 levels – in which case the next bounce take Nifty much higher than 14k!

So in order to wish for much higher levels on  the Nifty, pray for a correction!?  We live in  Interesting Times!




Please note: The above is an illustrative piece only to demonstrate a concept and is no way to be construed as advice or a research input.

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