No black swans: Markets may rise further

The long-term trend may suggest a reversal if Nifty50 falls below 20,000

- DEVANGSHU DATTA

Since March 2020, when the Nifty50 plummeted to 7,511 following the announcement of a nationwide lockdown, the stock market has been on an upward trajectory. Over the next four years, the major market index has delivered a remarkable compounded annual rate (CAGR) of over growth 31.5 per cent. In the past year alone, the Nifty50 has gained by 27 per cent, hitting a succession of record highs.

During this period, the benchmark largecap index has been outperformed by indices tracking smaller stocks. Over the past year, the Nifty Midcap 50 index has risen by 60.7 per cent, the Nifty Smallcap 250 by 61 per cent, and the Nifty Microcap 250 by 85 per cent.

Among industry-specific indices, the Nifty Realty has surged 123 per cent, the Nifty PSU Bank is up 85 per cent, and the auto (Nifty Auto) and pharma (Nifty Pharma) sector indices have yielded returns of 63.6 per cent and 62.5 per cent, respectively. Even "underperforming" sectors have fared well: the IT index has risen by 22.9 per cent, the FMCG gauge by 19.4 per cent, the Bank Nifty by 15.7 per cent, and the Nifty Private Bank by 13.4 per cent.

All the usual indicators are positive. Every major industry index is up, the ratio of advances to declines is robust, trading volumes are healthy, and the primary market is bustling.