One of the top most CIOs of a mutual fund (I really mean a big fund house) told me “Subra we have perhaps seen the best bull run in our lives” in June 2008. However being a fund manager he could not tell all his clients pack up and go. Similarly many other fund managers too were paring down on high p/e stocks and going to value stocks.

So apart from all these one question which people are asking me is “What to do now?”. I have done enough posts on that. So the next question is “Is the bear market over?” I find this question also difficult to answer.

Our markets have capitulated. Surely capitulation is a good word to use – a 50% fall is called capitulation! I think the stage next to capitulation is boredom. Currently fund managers are going from private equity player meetings, bank meetings, tv channels and urging people to buy. People are also watching these channels. The next stage is when people say “I do not look at these channels”, “I have no idea where is my demat account statement” , “I have stopped buying ET” then daily volumes have to slump and slump really low. By then the market would have ground to say 9500.

Then when all the weak people have been “bored”, “gored”, “bled” out of the market, the market will go up. First from 9500 to 10500. People will call it the “dead cat bounce”. Channels will say how the “A-D” ratio is still negative. How the US is still in a recession. Then the markets will go upto 14000. Then there will be some good news in the form of quarterly results. The new BJP government would be in place by then. All of a sudden there will be 12 bn US $ inflow – from Japan and Saudi Arabia. Now the market would be at 18000. So all those who sold at 9500 out of boredom will come back.

Then …oh thats another story!!